National Energy Administration: Establish a mechanism for transmitting electricity ancillary service charges in accordance with the principle of "who benefits, who bears the burden"

On April 29th, relevant officials from the National Energy Administration responded to questions from reporters regarding the "Notice on Issuing the Basic Rules of the Electricity Ancillary Services Market". It was mentioned in the notice to improve the ancillary services cost transmission mechanism. According to the principle of "beneficiary pays", in conjunction with the development of the electricity spot market, an ancillary services cost transmission mechanism will be established. In areas where the electricity spot market operates continuously, the costs for services such as frequency regulation and reserve capacity, as specified, will be shared by electricity users and the internet electricity quantities that did not participate in market transactions. The full text is as follows: Recently, the National Development and Reform Commission and the National Energy Administration issued the "Notice on Issuing the Basic Rules of the Electricity Ancillary Services Market" (referred to as the "Notice" below). Relevant officials from the National Energy Administration accepted an interview and answered questions from reporters. Q: What is the background and purpose of issuing the "Notice"? A: Ancillary services refer to the system regulation services provided by both sides of the generation and consumption other than normal electricity production, transmission, and use, which are essential for maintaining system stability. The development of ancillary services in China has gone through three stages: free service before 2006, planned compensation from 2006 to 2014, and partial marketization from 2014 to now. With the increasing proportion of new energy installations, the demand for power system flexibility has surged, and the capacity for regulation is insufficient. It is necessary to further explore the potential of system regulation through market mechanisms. In accordance with local conditions, various regions have gradually explored the establishment of market-based varieties of peak shaving, frequency regulation, reserve capacity, etc., transforming ancillary services from planned to market-oriented and from generation side to multiple entities. Up to now, 16 provinces have established peak shaving markets, 15 provinces have established frequency regulation markets, and 2 provinces have established climbing markets. Six regions have established frequency regulation, reserve capacity, peak shaving, and other markets, effectively enhancing system regulation capacity through competition. The electricity ancillary services market plays an important role in maintaining system stability, ensuring power supply, promoting the integration of new energy, and driving the transformation of coal-fired power. In February 2024, the National Development and Reform Commission and the National Energy Administration issued the "Notice on Establishing and Improving the Price Mechanism of the Electricity Ancillary Services Market" (Price Adjustment [2024] No. 196), further improving the price formation mechanism for ancillary services. With the active promotion of the construction of a unified national electricity market, ancillary services, as important commodities, urgently require unified regulation and coordinated promotion at the national level. For this purpose, we have compiled the "Basic Rules of the Electricity Ancillary Services Market" (referred to as the "Rules" below), together with the "Basic Rules of the Electricity Medium and Long-Term Trading" and the "Basic Rules of the Electricity Spot Market (Trial)", to jointly build the three main trading commodities of the national unified electricity market, marking the basic establishment of the top-level design of the three major trading commodities. Q: What are the main contents of the "Rules"? A: The "Rules" consist of 12 chapters and 67 articles, including general principles, market participants, market establishment, market varieties, trading organizations, cost transmission, market coordination, measurement settlement, information disclosure, risk prevention and control, supervision and management, and general provisions. The main contents include: First, clarify the scope of market operators in the ancillary services market. Market operators in the ancillary services market include power generation enterprises, power sales enterprises, electricity users, and new types of operators. The status of energy storage enterprises, virtual power plants, smart microgrids, and electric vehicle-grid interactive operation enterprises is particularly clarified to guide the participation of new types of operators in regulation. Second, standardize the process of establishing ancillary services trading varieties. The electricity dispatching agency proposes the demand for the construction of the electricity ancillary services market based on the needs of system security and stability, formulates an analysis report, and submits it to the dispatched agency of the National Energy Administration and the provincial price and energy authorities. The dispatched agency of the National Energy Administration, together with the provincial price and energy authorities, organizes a demonstration of the rationality of the demand and formulates an implementation plan to submit to the National Energy Administration for implementation after being approved by the National Development and Reform Commission. When establishing new varieties, relevant processes such as simulation trial operation, settlement trial operation, and formal operation should be carried out sequentially. Third, improve the cost transmission mechanism for ancillary services. It is explicitly stated that, in accordance with the principle of "beneficiary pays", in conjunction with the development of the electricity spot market, an ancillary services cost transmission mechanism will be established. In areas where the electricity spot market operates continuously, the costs for services such as frequency regulation, reserve capacity, etc., as specified, will, in principle, be shared by electricity users and the internet electricity quantities that did not participate in market transactions. Fourth, clarify the mechanism of connection with the electricity spot market. It is clear that ancillary service markets for active services such as frequency regulation, reserve capacity, climbing, and other services can be independently cleared, and when conditions are met, they can push for joint clearance with the spot market. The costs of electricity generated during the provision of ancillary services by the market operators shall be settled in accordance with the rules of the electricity spot market. Fifth, clarify the responsibilities of electricity market operating institutions. The electricity dispatching agency is responsible for proposing the demand for ancillary services, unifying procurement, organizing ancillary services transactions, market clearance, service calls, cost calculation, proposing safety constraints, conducting safety checks, and operating and monitoring the ancillary services market. It is also responsible for the construction, operation, maintenance, and management of technical support systems related to the ancillary services market. The electricity trading institution is responsible for market registration, changes, and exits of market operators, disclosure of information on the electricity ancillary services market, and providing settlement basis. Q: How to effectively implement the "Notice" in various regions in the next steps? A: The National Development and Reform Commission and the National Energy Administration will closely monitor the operation of the electricity ancillary services market, give full play to the role of dispatched agencies of the National Energy Administration, urge market operators to organize transactions in a standardized manner, and guide various types of operators to participate in the market in a standardized manner, and supervise the operation of the electricity ancillary services market. Regions should, in accordance with the "Notice" and document No. 196 of the National Energy Administration, organize the revision of the implementation rules of the ancillary services market in a timely manner for market operators, maintain a unified and fair competition system, and ensure consistency with the requirements of the basic rules. This article is selected from the National Energy Administration, GMTEight, Editor: Chen Wenfang.