Impact of COVID-19 on Ancillary Services for Power Market : Implications on Business

Ancillary Services for Power Market

Renewable Energy Management Fuels Demand for Ancillary Services for Power

The competition for ancillary services has intensified due to the rising trend of distributed power generation. As such, the ancillary services for power market is fragmented with emerging market players accounting for a cumulative revenue share of ~88%. Thus, rising amount of intermittent distributed generation of wind and solar energy has fueled the demand for ancillary services. Greater fluctuation in system frequency and local network congestion are some of the key drivers that are catalyzing growth of the ancillary services for power market.

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On the other hand, renewable power sources, such as the solar and wind energy are growing popular, owing to their cost efficiency attributes as compared to conventional power. As such, Europe is growing as the hub for harnessing the advantages of wind energy, resulting in increased demand for ancillary services for power. There is a need for better policies and regulations to streamline the ancillary services for power pertaining to renewable energy (RE) sources.

ancillary services power market infographic

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Adjustable Power Reserves Play Key Role in Balancing of Electricity

Since electricity is stored in limited volumes, in several cases, consumer demands exceed the generation of electricity. Hence, companies in the ancillary services for power market are increasing their R&D activities in adjustable power reserves that play an instrumental role in upward and downward balancing. For instance, RTE France- an ancillary services provider for renewable energy, is increasing efforts to innovate in both automatically and manually activated reserves to meet specific needs of users.

The ancillary services for power market is projected to reach a revenue of ~US$ 16 Bn by the end of 2030. This is evident, since coal-based electricity generation in the India ancillary services for power market is being replaced by renewable energy plants. Thus, renewable energy generation is one of the key trends, which is fueling growth for the market of ancillary services for power.

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Robust Storage Facilities Help Overcome Limitations of Output Fluctuations for RE Plants

Companies in the ancillary services for power market are undertaking pilot projects pertaining to renewable energy plants in redispatch. However, output fluctuations and network congestions are some of the key challenges that are restricting the adoption of RE plants.

The global ancillary services for power market is projected to advance at a CAGR of ~8% during the assessment period. The trend of RE generation is becoming increasingly prominent in countries of Asia. As such, Asia Pacific is predicted to generate the second-highest revenue among all regions in the market for ancillary services for power. However, technical and political challenges pertaining to output fluctuations and network congestion are likely to impede growth for the market of ancillary services for power. Hence, operators are investing in the establishment of robust storage facilities involving high-capacity batteries and pumped storage hydro power.

Hourly Real-time Demarcation of Energy Trade Deploys Greater Efficiency in Ancillary Services

Distribution companies (discom) in the ancillary services for power market prepare power procurement plans to eliminate any uncertainties regarding the demand and supply of electricity. This planning is typically carried out for a long period of over seven years, medium and short-term period of only months to set the demand and generation expectations correctly for discoms. However, real-time balance of the demand and supply of electricity has its uncertainties, making it difficult to balance the grid. Hence, companies in the ancillary services for power market are increasing efforts to achieve a clear demarcation between energy trade and system imbalance handling.

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