Recently, the National Development and Reform Commission and the National Energy Administration issued the Notice of the National Development and Reform Commission and the National Energy Administration on Establishing and Improving the Market Price Mechanism for Power Ancillary Services (hereinafter referred to as the Notice). The Notice calls for strengthening the overall connection between the power ancillary service market, the medium and long-term market and the spot market, scientifically determining the market demand for ancillary services, rationally setting up the types of paid ancillary services, and standardizing the market rules such as the pricing of ancillary services. According to the general principle of "who serves, who profits, who benefits, who bears", we should constantly improve the price formation mechanism of ancillary services, promote the orderly transmission and sharing of ancillary services costs, and fully mobilize the initiative of flexible regulation resources to actively participate in system regulation. We should strengthen policy coordination and standardize the price management mechanism of ancillary services. At the same time,
the Notice proposes to optimize the transaction and price mechanism of peak shaving ancillary services, improve the transaction and price mechanism of frequency modulation ancillary services, improve the transaction and price mechanism of reserve ancillary services, standardize the price transmission of ancillary services, and strengthen policy support.
Relevant personages said that power ancillary services refer to the auxiliary regulation services provided to the system in order to maintain the safe and stable operation of the power system and ensure the quality of power. It is expected that after the implementation of the policy, the total scale of the national ancillary service costs will be reduced, and the burden of the business entities or users on the ancillary service costs will be more fair and reasonable. Circular
of the State
Development and Reform Commission and the State Energy Administration on
Establishing and Improving the Price Mechanism of the Electric Power Auxiliary Service Market Development and Reform Price [2024] No.
196 Development and Reform Commission and Energy Administration of all provinces, autonomous regions, municipalities directly under the Central Government and Xinjiang Production and Construction Corps. The agencies of the National Energy Administration, State Grid Corporation of China, China Southern Power Grid, Inner Mongolia Electric Power (Group) Co., Ltd., China National Nuclear Corporation, China Huaneng Group, China Datang Corporation, China Huadian Corporation, State Power Investment Corporation, China Three Gorges Corporation, China Energy Investment Group Co., Ltd., China Development Investment Group Co., Ltd., China Resources (Holdings) Co., Ltd., China General Nuclear Power Group Co., Ltd.:
The power ancillary service market is an important part of the power market system. In recent years, various regions have promoted the construction of power ancillary service market and established ancillary service market mechanisms such as peak shaving, frequency modulation and reserve, which have played a positive role in ensuring power quality, safe and stable operation of power system and promoting new energy consumption. In order to implement the decision-making and deployment of the CPC Central Committee and the State Council on deepening the reform of the electric power system and accelerating the construction of a new type of electric power system, further improve the formation mechanism of electric power prices, enhance the comprehensive regulation capacity of the electric power system, and promote the consumption of clean energy and the transformation of green and low carbon, the following notice is given on the establishment and improvement of the market price mechanism of electric power ancillary services.
First, the general idea
is to adapt to the development needs of the new power system and continue to promote the construction of the power ancillary service market. Strengthen the overall connection between the power ancillary service market, the medium and long-term market and the spot market, scientifically determine the market demand for ancillary services, rationally set up the types of paid ancillary services, and standardize the market rules such as the pricing of ancillary services. According to the general principle of "who serves, who profits, who benefits, who bears", we should constantly improve the price formation mechanism of ancillary services, promote the orderly transmission and sharing of ancillary services costs, and fully mobilize the initiative of flexible regulation resources to actively participate in system regulation. We should strengthen policy coordination and standardize the price management mechanism of ancillary services.
2. Optimizing the transaction and price mechanism
of peak-shaving ancillary services (1) Improving the transaction mechanism of peak-shaving market. In areas where the electricity spot market operates continuously, the spot market rules should be improved, the market price limit should be relaxed appropriately, the peak shaving function should be guided, and the markets with similar functions such as peak shaving, peak shaving capacity and so on should no longer operate. In areas where the electricity spot market is not in continuous operation, in principle, wind power and photovoltaic generating units shall not be the main providers of peak shaving services, and hydropower generating units shall be promoted to participate in paid peak shaving in a timely manner. Other generating units shall declare their time-sharing output and price independently according to the rules during the period when the spot market is not in operation, and the clearing price and the winning peak shaving output shall be determined through market competition. Transactions such as regional peak shaving and regional reserve with electric energy exchange shall be converted to electric energy transactions in a timely manner.
(Two) reasonably determine the upper limit of peak shaving service price. In accordance with the principle that the consumption cost of new energy projects is not higher than the value of power generation, the upper limit of peak shaving service price is reasonably determined, and the upper limit of peak shaving service price is not higher than the grid price of local parity new energy projects in principle.
3. Improve the trading and pricing mechanism
of FM ancillary services (3) Standardize the trading mechanism of FM market. In principle, the FM market adopts a single price mechanism based on FM mileage. Each unit independently declares the time-sharing frequency modulation capacity and price according to the rules, and determines the clearing price and the bid-winning frequency modulation capacity through market competition. The FM cost is calculated based on the product of clearing price, FM mileage and performance coefficient.
(Four) reasonably determine the upper limit of FM service price. The frequency regulation performance coefficient is determined by the product or weighted average of the three sub-parameters of regulation rate, regulation accuracy and response time, and the sub-parameters are converted on the basis of the design parameters corresponding to the main engine of the local coal-fired power unit with the best performance (excluding the combined fire and storage unit). In principle, the maximum coefficient of performance shall not exceed 2, and the upper limit of the clearing price of frequency modulation mileage shall not exceed 0 per kilowatt.
4. Improve the trading and pricing mechanism
of reserve ancillary services (5) Standardize the trading mechanism of reserve market. In principle, the reserve market adopts a single price mechanism based on the winning capacity and time. The demand for reserve capacity shall be determined by the power dispatching authority according to the security and economic requirements of the system and the actual situation. Each unit shall declare the reserve capacity and price according to the rules, and determine the clearing price, winning capacity and time through market competition. The reserve fee shall be calculated based on the product of clearing price, bid-winning capacity and bid-winning time. If the actual reserve capacity is lower than the bid-winning capacity, the actual reserve capacity shall be used for settlement.
(Six) reasonably determine the upper limit of standby service price. Factors such as the opportunity cost of providing reserve service (loss caused by reserved reserve capacity and non-generation) shall be considered as a whole, and the upper limit of reserve service price shall be reasonably determined. In principle, the upper limit of reserve service price shall not exceed the upper limit of local electricity market price.
5. Standardizing the price transmission
of ancillary services (7) Reasonably determining the demand for ancillary services. In order to ensure the safe and stable operation of the power system, all localities should scientifically calculate and determine the demand for ancillary services in accordance with the principle of standardization and transparency. Auxiliary service mechanisms such as climbing can be explored in combination with local conditions, and the clearing price, winning units and winning capacity can be determined through market competition, and the price ceiling can be reasonably arranged. The scale and price standard of ancillary service fees shall not be determined by adjusting the settlement formula afterwards. Power grid enterprises should strengthen fine management and improve the level of economic dispatch.
(Eight) improve the transmission mechanism of ancillary service fees. All localities should standardize the management of ancillary service costs, and the cost of ancillary services borne by the user side should be the loss caused by the failure to generate electricity due to the provision of ancillary services that cannot be compensated by the electric energy market. In areas where the electricity spot market is not in continuous operation, ancillary service fees shall not be channeled to the user side in principle. In areas where the electricity spot market operates continuously, the cost of frequency modulation and reserve ancillary services that meet the above requirements (excluding the cost of electricity generated in the process of providing ancillary services) shall, in principle, be shared by the user's electricity consumption and the on-grid electricity that does not participate in the transaction of the electricity market, and the proportion of sharing shall be determined by the provincial price authorities. Other ancillary service fees that need to be borne by the business entity shall be submitted for approval in accordance with the procedures.
(9) Standardizing the settlement of ancillary service fees. The cost of ancillary services borne by users is included in the cost of system operation and settled together with electricity charges. In areas where the electricity spot market operates continuously, the mode of "daily settlement and monthly settlement" is adopted. The compensation, apportionment and assessment fees for ancillary services of various varieties shall be calculated separately and listed separately in the settlement sheet.
6. Strengthen policy support
(10) Promote fair participation of all kinds of business entities in the ancillary service market. When determining the access conditions for participating in the ancillary services market in accordance with the relevant provisions of the State, all localities shall implement fair access and shall not designate specific subjects or make discriminatory provisions against specific subjects. The business entity that has obtained the capacity tariff shall participate in the market quotation of ancillary services. For business entities with both power generation and power consumption identities, they shall participate in the ancillary service market according to the main body of power generation and the main body of power consumption respectively when discharging and charging (using) electricity, and shall be equally subject to all kinds of assessments.
(11) Strengthen the overall connection between the ancillary service market and the medium and long-term market and the spot market. All localities should coordinate the formulation of ancillary service market, medium and long-term market and spot market rules, speed up the construction of ancillary service market, realize the standardized and efficient operation of ancillary service market such as frequency modulation and reserve as soon as possible, and meet the system security needs of large-scale grid-connected new energy. In areas where the spot market operates continuously, the ancillary service market and the spot market are jointly cleared. The electricity generated in the process of providing ancillary services shall be settled according to the spot market price or the medium and long-term trading rules.
(Twelve) improve the price management mechanism of ancillary services.The National Development and Reform Commission and the National Energy Administration shall strengthen the top-level design and work guidance, and formulate policies related to the price of ancillary services; the market rules for power ancillary services shall be separately formulated by the National Energy Administration and the National Development and Reform Commission. The agency dispatched by the National Energy Administration shall, in conjunction with the competent price department at the provincial level, put forward the implementation plans for the ancillary service varieties, demand determination mechanism, price mechanism, market price limit standard and cost channeling mode within its jurisdiction in accordance with the relevant provisions of the State, and shall submit them to the National Energy Administration after soliciting the opinions of the local energy and power operation departments, and shall be implemented with the approval of the National Development and Reform Commission. In accordance with the requirements of this circular,
all localities should systematically sort out the operation and charging situation of the ancillary service market, improve the price policy and trading rules of ancillary services, and redefine the price mechanism and level of ancillary services in accordance with the procedures within six months after the issuance of this circular.
(Thirteen) strengthen market monitoring, supervision and inspection. All localities shall strengthen the tracking and monitoring of the operation of the power ancillary service market and the price mechanism, timely assess the use of ancillary service funds and the implementation of policies, and strengthen the interpretation of policies to help business entities better understand and implement them. Local power grid enterprises regularly report the price, cost, key parameters of valuation, income and sharing of various subjects of paid ancillary service transactions to the National Development and Reform Commission (Price Department), the National Energy Administration (Market Supervision Department), the local agencies of the National Energy Administration and the provincial price authorities, and simultaneously disclose them to the relevant business entities. Provincial price authorities should strengthen the management of electricity prices, do a good job in the price calculation and impact analysis of ancillary services, and report in time. The State Development and Reform Commission, together with the State Energy Administration and other departments, will strengthen market supervision and inspection, promptly correct and standardize the price policies and trading rules of ancillary services that do not conform to the relevant provisions of the State, urge and guide local governments to improve the mechanism and promote the rational formation of ancillary service prices.
This Circular shall be implemented as of March 1, 2024. Where the relevant provisions of the existing policies are inconsistent with this Circular, the provisions of this Circular shall prevail.
