Ancillary Services Market

The IESO contracts for four ancillary services to help ensure the reliable operation of the power system: certified black start facilities, regulation service, reactive support and voltage control service, and reliability must-run.

Certified Black Start Facilities

Certified black start facilities help system reliability by being able to restart their generation facility with no outside source of power. In the event of a system-wide blackout, black start facilities would be called on during restoration efforts by helping to re-energize other portions of the power system.

Standard Terms and Conditions:         

  • Monthly fixed payments
  • Annual and monthly testing requirements
  • Payments may be reduced if the facility fails to pass tests or fails to perform during a blackout

Regulation Service

Regulation service acts to match total system generation to total system load (including transmission losses) and helps correct variations in power system frequency. This service corrects for short-term changes in electricity use that might affect the stability of the power system. Regulation service has historically been provided by generation facilities with automatic generation control (AGC) capability, which permits them to vary their output in response to signals sent by the IESO.

Current Regulation Service:

  • Minimum of ±100 MW of automatic generation control (AGC) must be scheduled at all times
  • Minimum overall ramp rate requirement for Ontario is 50 MW/minute
  • Payments comprise fixed and variable costs 

Evolution of the regulation service market

In 2012, the IESO took a first step towards increasing the participation of alternative technologies such as aggregated loads, flywheels and battery storage in the electricity market. This has been accomplished by selecting three new suppliers of regulation service, a grid-balancing function traditionally provided by generators − a first for Ontario.   

Growing needs for regulation capacity

Like many jurisdictions across North America, the IESO is monitoring several factors driving the need to expand the regulation service market in Ontario including:

  • The inherent weather-related uncertainty in all forecasts related to variable generation
  • The autonomous behaviour of embedded distributed energy resources such as controllable loads, embedded generation and storage that are not subject to IESO dispatch instructions
  • Non-linear behaviour of demand patterns between 5-minute dispatch intervals

Drivers of the increased need for regulation service are described in the 2016 IESO Operability Assessment Summary.

The IESO plans to expand its capability to schedule regulation by increasing the amount of regulation usually scheduled from 100 MW to 150-200 MW between 2017 and 2019 and have sufficient market depth to schedule up to 250 to 300 MW of regulation capacity on an as-needed basis by the year 2020. The IESO is seeking to reach this target through:

  1. one or more competitive procurements between now and 2020 with a view to increasing competition, including the 2017 Regulation Service RFP outlined below;
  2. examination of potential additional regulation products to unlock the value of emerging technologies and fast-moving resources; and
  3. standardized, simplified, regulation agreements that are more in-line with prevailing commercial terms in North American electricity markets.

Regulation signal

In order to ensure compliance with applicable North American Electric Reliability Corporation (NERC) standards, the IESO computes the Area Control Error (the instantaneous difference between actual and scheduled interchange, taking into account the effects of frequency bias) and dispatches units contracted to provide AGC. The regulation signal is provided as a MW quantity ("setpoint") to generators at a frequency of up to once every two seconds.

The IESO's calculates the economic dispatch for AGC units ("basepoint") as a function of a generator's offer price relative to the Hourly Ontario Energy Price (HOEP). The basepoint dispatch respects the upper and lower bounds of the facility's operating range in which it can provide AGC services and takes into account the unit's ramp rate.

The difference between the setpoint and basepoint is the MW quantity of regulation service that a unit is providing at a given moment in time (in various jurisdictions the absolute value of this difference is more commonly referred to as "mileage").

Additional regulation signal sample data posted

In the lead-up to the pending regulation RFI, the IESO posted a sample of its regulation signal data. This data will assist potential new entrants into the regulation market to assess, test, and simulate various scenarios with an actual sample of the IESO's regulation signal data. The regulation sample data files provide interested parties with an opportunity to analyze various characteristics of the regulation signal such as upward/downward bias, volatility, correlations with other datasets, etc. The data can also be mathematically scaled to fit the range of a prospective facility for testing and evaluation purposes. As of July 22, 2016, a complete calendar year of sample data is now available in across two sample files as follows:

Download: Signal sample: Concatenated Sample for the period from June 24, 2015 to December 31, 2015 (13MB)

Download: Signal sample: Concatenated Sample for the period from January 1, 2016 to June 30, 2016 (14 MB)

Download: Descriptor of the sample data, revised July 22, 2016

IESO Market Rules governing regulation service

The following sections of the IESO Market Rules contain requirements concerning regulation service:

  • Chapter 4, Appendices 4.2, 4.8, 4.15 and 4.19
  • Chapter 5, Sections 4.4, 4.9, 4.10; Section 12; and Appendix 5.1, Section 1.1
  • Chapter 7, Section 9

Technical description of the regulation signal

Regulation Service RFP

2017 Request for Proposals (RFP) for Incremental Regulation Capacity

The IESO is seeking to procure incremental regulation capacity through an upcoming Regulation Service RFP. Through the upcoming RFP, the IESO is seeking to secure 50 MW of scheduled regulation service. Please visit the Regulation Service RFP webpage for further information regarding the RFP.

Reactive Support and Voltage Control Service    

Reactive support and voltage control service is contracted from generators and allows the IESO to maintain acceptable reactive power and voltage levels on the grid. Both active and reactive are required to serve loads. Reactive power flow is needed in an alternating-current transmission system to support the transfer of active power over the network. All generating facilities that are injecting energy into the IESO-controlled grid are required to provide reactive support and voltage control service in accordance with the market rules.

Standard Terms and Conditions:

  • Prices are based on the costs of providing reactive power.  Traditionally this includes the additional costs that occur as a result of energy losses during facility operation. Hydro-electric facilities that can provide speed-no-load and condense service may also receive additional payments if their service is required by the IESO to maintain system reliability.
  • Testing requirements are in accordance with NERC planning standards

Reliability Must-Run

Reliability must-run (RMR) contracts are used to ensure the reliability of the IESO-controlled grid. A RMR contract allows the IESO to call on the registered facility under contract to produce electricity if it is needed to maintain the reliability of the electricity system. RMR contracts obligate the market participant to offer into the IESO-administered markets the maximum amount of energy and operating reserve in a commercially reasonable manner and in accordance with stated performance standards. More information is available in Chapter 7, section 9.8.1 of the IESO's Market Rules.

Costs and Quantities of Contracted Ancillary Services

Annually, the IESO publishes costs and quantities of all contracted ancillary services in accordance with Chapter 7, section 9.8 of the IESO's Market Rules.

For the period January 1, 2016 to December 31, 2016

Ancillary Service

Facilities

Quantity of Service purchased

Annual Financial Amount (2016)

Anticipated change to requirements over next 12 months

Certified Black Start Facility

4 generation facilities

Certified Black Start Service from each facility

$1,560,432.59

No change

Regulation Service

7 generation facilities + 3 Alternative Technologies for Regulation (ATR facilities)

±228.8 MW (nominal contracted regulation capacity) with typically ±100 MW of regulation service scheduled

$44,328,678.18

Additional facilities as per Phase 1 Energy Storage program. Potential additional capacity delivered by 2017 Regulation RFP

Reactive Support and Voltage Control

57 generation facilities having 209 generation units

Reactive support and voltage control service as required by prevailing system conditions

$18,456,351.64

Additional facilities as per Phase 1 Energy Storage program.

Reliability Must-Run

None

None

None

 

Total amount paid for all Ancillary Services for the period January 1, 2016 to December 31, 2016

 

 

$64,345,462.41

 

For the period January 1, 2015 to December 31, 2015

Ancillary Service

Facilities

Quantity of Service purchased

Annual Financial Amount (2015)

Anticipated change to requirements over next 12 months

Certified Black Start Facility

4 generation facilities

Certified Black Start Service from each facility

$1,410,114.36

No change

Regulation Service

7 generation facilities + 3 Alternative Technologies for Regulation (ATR facilities)

±289.8 MW with typically ±100 MW of regulation service scheduled

$45,150,514.04

Additional facilities as rer Phase 1 Energy Storage program. See description of pending RFI.

Reactive Support and Voltage Control

59 generation facilities having 235 generation units

Reactive support and voltage control service as required by prevailing system conditions

$20,018,689.52

Additional facilities as per Phase 1 Energy Storage program.

Reliability Must-Run

None

None

None

 

Total amount paid for all Ancillary Services for the period January 1, 2015 to December 31, 2015

 

 

$66,579,317.92

 


For the period January 1, 2014 to December 31, 2014
  1. Eight market participants were under contract to provide reactive support and voltage control service from a total of 59 generation facilities having 235 generation units.
  2. Four generating stations were under contract to provide certified black start capacity.
  3. Ten generating stations, two energy storage facilities and one load aggregation facility were under contract to provide regulation service. The total contracted capability was ±245 MW with typically ±100 MW of regulation service scheduled.
  4. The amount paid by the IESO for contracted ancillary services was $64,205,856.27. The portion paid for reactive support and voltage control service was $15,688,062.11. 

For the period January 1, 2013 to December 31, 2013
  1. Seven market participants were under contract to provide reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  2. Four generating stations were under contract to provide certified black start capacity.
  3. Ten generating stations were under contract to provide regulation service. The total contracted capability was ±239 MW with typically ±100 MW of regulation service scheduled.
  4. One generating station was under contract to provide Reliability Must-Run services.
  5. The amount paid by the IESO for contracted ancillary services was $95,266,898.97. The portion paid for reactive support and voltage control service was $21,720,689.20.    

For the period January 1, 2012 to December 31, 2012
  1. Seven market participants were under contract to provide reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  2. Four generating stations were under contract to provide certified black start capacity.
  3. Ten generating stations were under contract to provide regulation service. The total contracted capability was ±238 MW with typically ±100 MW of regulation service scheduled.
  4. The amount paid by the IESO for contracted ancillary services was $60,054,046.95. The portion paid for reactive support and voltage control service was $24,134,293.39.
For the period January 1, 2011 to December 31, 2011
  1. Seven market participants were under contract to provide reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  2. Four generating stations were under contract to provide certified black start capacity.
  3. Ten generating stations were under contract to provide regulation service. The total contracted capability was ±238 MW with typically ±100 MW of regulation service scheduled.
  4. The amount paid by the IESO for contracted ancillary services was $52,994,292.19. The portion paid for reactive support and voltage control service was $21,285,662.88.
For the period January 1, 2010 to December 31, 2010
  1. Six market participants were under contract to provide reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  2. Four generating stations were under contract to provide certified black start capacity.
  3. Ten generating stations were under contract to provide regulation service. The total contracted capability was ±238 MW with typically ±100 MW of regulation service scheduled.
  4. The amount paid by the IESO for contracted ancillary services was $49,959,557.33. The portion paid for reactive support and voltage control service was $23,426,682.10.
For the period May 1, 2009 to April 30, 2010
  1. Consistent with the requirements of the Market Rules, all ancillary services contracts were for periods not exceeding 36 months.
  2. The emergency demand reduction program ended on April 30, 2010. Until that date Nine facilities were under contract for an aggregate of 217 MW of potential emergency demand reduction. There were no payments for this service during this period.
  3. Six market participants were under contract to provide reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  4. Four generating stations were under contract to provide certified black start capacity.
  5. Ten generating stations were under contract to provide regulation service. The total contracted capability was ±238 MW with typically ±100 MW of regulation service scheduled.
  6. For this period, the total amount paid by the IESO for contracted ancillary services was $44,396,518. The portion paid for reactive support and voltage control service was $10,927,389.

For the period May 1, 2008 to April 30, 2009
  1. Consistent with the requirements of the Market Rules, all ancillary services contracts were for periods not exceeding 36 months.
  2. Nine facilities were under contract for an aggregate of 217 MW of potential emergency demand reduction, but there were no payments for this service during this period.
  3. Six market participants were under contract to provide reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  4. Four generating stations were under contract to provide certified black start capacity.
  5. Nine generating stations were under contract to provide regulation service. The minimum regulation service to be scheduled was ±100 MW, and the maximum contracted capability was ±223 MW. Typically ±100 MW of regulation service was scheduled.
  6. There was one reliability-must-run contract, which has now expired and is not expected to be renewed.
  7. During this period, the total amount paid by the IESO for contracted ancillary services plus one now-expired reliability-must-run contract was $130,560,674.
For the period May 1, 2007 to April 30, 2008
  1. The contracts for emergency demand reduction lasted until April 30, 2007. The ongoing need for the Emergency Demand Response Program was reviewed, and the program will continue. Contracts have been renewed in 2007 for three year periods.
  2. Market participants that provide reactive support and voltage control service in response to IESO direction under the Market Rules and in doing so incur additional costs, but do not have a corresponding contract with the IESO, are entitled to reimbursement by the IESO. Accordingly they are invited to enter into contracts with the IESO.
  3. The IESO obtained all required contracts for certified black start facilities in 2006 and early 2007, and no additional new contracts are anticipated for the year ending April 30, 2008.
  4. The RMR contract with one facility expires on September 30, 2007. The IESO has negotiated a new 12-month RMR contract for this facility commencing October 1, 2007, which is proceeding through the approval process.

For the period May 1, 2006 to April 30, 2007
  1. Consistent with the requirements of the market rules, all ancillary services contracts were for periods not exceeding 36 months, and reliability must run contracts were for periods not exceeding 12 months.
  2. Eleven facilities were under contract for an aggregate of 229.8 MW of emergency demand reduction. There were no payments for this service during this period.
  3. There were contracts with several market participants for the provision of reactive support and voltage control service from a total of 56 generation facilities having 233 generation units.
  4. Four generating stations were under contract to provide certified black start facilities.
  5. Five generating stations were under contract to provide regulation service. The minimum regulation service to be scheduled was ±100 MW, and the maximum contracted capability was ±200 MW. Typically ±100 MW of regulation service was scheduled.
  6. There was one reliability must run contract.
  7. The total amount paid by the IESO during the 12 month period ending April 30, 2007 for contracted ancillary services and reliability must run contracts was $134,823,000.
  8. Market Rules Chapter 7 section 9.8.1.4 states: "Where the IESO obtains contracted ancillary services or reliability must run contracts in the presence of market power, as confirmed by the market surveillance panel, the IESO shall publish the relevant terms and conditions of the contracts, except for price which shall not be disclosed, in order to encourage competition."

For the period May 1, 2005 to April 30, 2006
  1. Consistent with the requirements of the market rules, all ancillary services contracts were for periods not exceeding 18 months, and reliability must run contracts were for periods not exceeding 12 months.
  2. Eleven facilities were under contract for an aggregate of 229.8 MW of emergency demand reduction. There were no payments for this service during this period.
  3. There were contracts with several market participants for the provision of reactive support and voltage control service from a total of 47 generation facilities having 210 generation units.
  4. Four generating stations were under contract to provide certified black start facilities.
  5. Five generating stations were under contract to provide regulation service. The minimum regulation service to be scheduled was ±150 MW, and the maximum contracted capability was ±300 MW. Typically ±150 MW of regulation service was scheduled.
  6. There was one reliability must run contract.
  7. The total amount paid by the IESO during the 12 month period ending April 30, 2006 for contracted ancillary services and reliability must run contracts was $87,578,000
  8. Market Rules Chapter 7 section 9.8.1.4 states: "Where the IESO obtains contracted ancillary services or reliability must run contracts in the presence of market power, as confirmed by the market surveillance panel, the IESO shall publish the relevant terms and conditions of the contracts, except for price which shall not be disclosed, in order to encourage competition."

For the period May 1, 2004 to April 30, 2005
  1. All AS contracts were for 18 months, as permitted under the Market Rules.
  2. Sixteen facilities were under contract for an aggregate of 417.8 MW of emergency demand reduction. There was no payment for this service during this period.
  3. There were contracts with several market participants providing reactive support and voltage control service from a total of 47 generation facilities having 210 generation units.
  4. Four generating stations were under contract to provide certified black start facilities.
  5. Five generating stations were under contract to provide regulation service. The typical regulation service requirement was reduced to ±150 MW, and the maximum contracted capability was reduced to ±300 MW.
  6. The total amount paid by the IMO during the 12 month period ending April 30, 2005 for contracted ancillary services was $53,884,000
  7. There were no reliability must run contracts, and hence no associated payments.
  8. Market Rules Chapter 7 section 9.8.1.4 states: "Where the IMO obtains contracted ancillary services or reliability must run contracts in the presence of market power, as confirmed by the market surveillance panel, the IMO shall publish the relevant terms and conditions of the contracts, except for price which shall not be disclosed, in order to encourage competition."

For the period May 1, 2003 to April 30, 2004
  1. There were contracts with eleven market participants for up to an aggregate of 417.8 MW of emergency demand reduction. There was one payment for this service, resulting from an IESO request for demand reduction as part of the restoration efforts during the August 14, 2003 blackout.
  2. There were contracts with three market participants providing reactive support and voltage control service from a total of 45 generation facilities having 202 generation units.
  3. Three generating stations were under contract to provide certified black start facilities.
  4. Five generating stations were under contract to provide regulation service. Until March 2004 ±200 MW around economic base-point was typically provided, with a maximum total contracted potential capability of ±500 MW around economic base-point. For March and April 2004, the typical regulation service requirement was reduced to ±150 MW, and the maximum contracted capability was reduced to ±300 MW.
  5. The total amount paid by the IESO for the year for the emergency demand reduction service, reactive support and voltage control service, certified black start facilities, and regulation service was $55,349,842.
  6. There were no reliability must run contracts, and hence no associated payments.
  7. Market Rules Chapter 7 section 9.8.1.4 states: "Where the IESO obtains contracted ancillary services or reliability must run contracts in the presence of market power, as confirmed by the market surveillance panel, the IESO shall publish the relevant terms and conditions of the contracts, except for price which shall not be disclosed, in order to encourage competition."

For the period May 1, 2002 to April 30, 2003
  1. There were contracts with seven market participants for up to an aggregate of 342 MW of emergency demand reduction. There were no payments for this service because the IMO did not request any demand reductions during the year.
  2. There were contracts with three market participants providing reactive support and voltage control service from a total of 44 generation facilities having 202 generation units.
  3. Two generating stations were under contract to provide certified black start facilities.
  4. Five generating stations were under contract to provide regulation service. Typically ±200 MW around economic base-point was provided, with a maximum total contracted potential capability of ±500 MW around economic base-point.
  5. The total amount paid by the IMO for the year for the reactive support and voltage control service, certified black start facilities, and regulation service was $38,427,253.
  6. There were no reliability must run contracts, and hence no associated payments.
  7. Market Rules Chapter 7 section 9.8.1.4 states: "Where the IMO obtains contracted ancillary services or reliability must run contracts in the presence of market power, as confirmed by the market surveillance panel, the IMO shall publish the relevant terms and conditions of the contracts, except for price which shall not be disclosed, in order to encourage competition."