Allocation of Ancillary Service Costs to Distributed Generators

Abstract

As an increasing amount of the electricity generated from renewable energy sources (RES-E) is fed into the power grid, various problems, such as frequency and voltage instability in the power system, occur more frequently. To address this problem, a system operator provides ancillary services such as balancing electricity supply and demand and procuring reactive power supply. Accordingly, the cost of ancillary services should be appropriately allocated to distributed generators of RES-E. This chapter proposes a method for solving this cost allocation problem. The method proposed is an application of the Aumann–Shapley (A–S) rule, which is one of cost sharing rules among multiple entities. If an ancillary service cost is expressed as a function of an electricity output vector, each element of which corresponds to each distributed generator, the cost share of a distributed generator will be computed based on the A–S rule. The difficulty of this method lies in how to obtain an ancillary service cost function. This chapter proposes that parametric linear programming be used to form that cost function, and we explain this computation method. The method may be useful for designing a new type of feed-in tariff system, which will be necessary after a diffusion goal is achieved under the current feed-in tariff system.