The National Development and Reform Commission (NDRC) and the National Energy Administration have issued a document regarding the basic rules for the electricity auxiliary service market. This document states that in areas where the electricity spot market operates continuously, there will be improvements to market rules, including a gradual relaxation of price limits to facilitate peak regulation functions. As a result, markets that perform similar functions, such as peak regulation and peak capacity, will no longer operate.
The key points of the rules include the following:
- Clarification of the scope of auxiliary service market operators: The auxiliary service market will include entities such as power generation companies, electricity sales companies, electricity users, and new operational entities. Notably, this includes energy storage companies, virtual power plants, smart microgrids, and vehicle-to-grid operation companies, which are encouraged to participate in regulation.
- Standardization of the transaction types in the auxiliary service market: The electricity dispatching agency will propose construction needs for the electricity auxiliary service market based on system safety and stability requirements, along with an analysis report. This will be submitted to the National Energy Administration and provincial pricing and energy departments. The National Energy Administration will collaborate with these provincial departments to assess the reasonableness of the demand and formulate an implementation plan, which will be executed following approval from the NDRC. New types will undergo processes including simulation operations, settlement trials, and formal operations.
- Establishment of a cost transmission mechanism for auxiliary services: A mechanism will be established based on the principle of “who benefits, who bears the cost.” This will consider the current state of the electricity spot market. In areas with continuous operation of the electricity spot market, the costs for auxiliary services such as frequency regulation and standby will generally be shared by users based on their electricity consumption and the amount of electricity not traded in the energy market.
- Clarification of the connection mechanism with the energy market: The auxiliary services market for frequency regulation, standby, and ramping can operate independently from the spot market, with joint clearing encouraged when conditions allow. The costs incurred by the operators providing auxiliary services will be settled according to the rules of the energy market.
- Clarification of the responsibilities of electricity market operational bodies: The electricity dispatching agency is responsible for proposing auxiliary service needs and coordinating procurement, organizing transactions, market clearing, service calls, cost calculations, establishing safety constraints, and conducting safety checks. They will also oversee the operation of the auxiliary service market and manage the related technical support systems. The electricity trading organization will handle market registration, changes, and exits for operational entities, disclose information about the electricity auxiliary service market, and provide bases for settlement.
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