With the active promotion of a unified national electricity market, the regulation of auxiliary services, which are essential trading commodities, requires a comprehensive national approach. Recently, the National Development and Reform Commission and the National Energy Administration released the “Basic Rules for the Electricity Auxiliary Service Market” (hereinafter referred to as “the Rules”) to encourage more auxiliary services to enter the market.
Electricity auxiliary services refer to the system regulation services provided by both supply and demand sides, in addition to the normal production, transmission, and consumption of electrical energy. These services act as a “regulator” to maintain system stability. A representative from the National Energy Administration noted that the development of auxiliary services in China has gone through three stages: prior to 2006, services were provided free of charge; from 2006 to 2014, services were compensated through a planned approach; and from 2014 onward, certain types have become market-oriented. As the proportion of renewable energy installations continues to rise, the demand for flexibility in the electricity system has surged, revealing a need to further tap into the system’s regulation potential through market mechanisms.
According to the representative, various regions have gradually explored the establishment of market-oriented auxiliary services such as peak regulation, frequency regulation, and reserve services, transitioning from a planned approach to a market-based one, and from generation-side services to multiple stakeholders. Currently, 16 provinces have established peak regulation markets, 15 have set up frequency regulation markets, 2 have implemented ramp-up markets, and 6 regions have developed markets for frequency regulation, reserve, and peak regulation, effectively enhancing system regulation capabilities through competition. The electricity auxiliary service market plays a crucial role in maintaining system stability, ensuring power supply, facilitating the integration of renewable energy, and promoting the transformation of coal power.
The “Rules” define the scope of entities involved in the auxiliary service market. These include power generation companies, electricity sales companies, electricity users, and emerging business entities. Notably, the status of storage companies, virtual power plants, smart microgrids, and vehicle-grid interaction operators as market participants is explicitly recognized, encouraging new business entities to engage in regulation.
Additionally, the “Rules” standardize the establishment process for auxiliary service trading categories. Power dispatching agencies will propose the need for constructing the electricity auxiliary service market based on the requirements for safe and stable system operations and draft an analysis report for submission to the local branch of the National Energy Administration and provincial pricing and energy authorities. The local branch, together with provincial authorities, will assess the reasonableness of the demand, develop an implementation plan, and submit it to the National Energy Administration for approval before implementation. When establishing new service types, relevant processes such as simulation trials, settlement trials, and formal operations must be conducted sequentially.
Regarding pricing, the “Rules” clarify that a “whoever benefits, bears the cost” principle will be followed. This includes establishing a cost transmission mechanism for auxiliary services, tailored to the situation of the electricity spot market. In regions where the electricity spot market operates continuously, the costs for frequency regulation, reserves, and other auxiliary services, if compliant with regulations, will generally be shared by users based on their electricity consumption and the volume of electricity not traded in the energy market.
A representative from the National Energy Administration stated that they will closely monitor the operation of the electricity auxiliary service market, fully leverage the role of the National Energy Administration’s local branches, and oversee market operators to ensure standardized trading and participation by various business entities in the market, as well as to regulate the operation of the electricity auxiliary service market.
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