Challenges and opportunities associated with high penetration of distributed and renewable energy resources

[Summary form only given]. Increased penetration of distributed and variable generation under the Smart Grid paradigm is expected to give rise to both operational challenges and market opportunities. This presentation will point out some of these challenges and opportunities, and will in particular investigate the impact of high penetration of these resources on "reserve" Ancillary Service requirements and opportunities. Currently, the Ancillary services defined by FERC and procured and used in the ISO/RTO markets include Regulation, Spinning Reserve, and Supplemental (non-spinning) Reserve. Moreover, Energy Imbalance, Reactive Supply/Voltage Control and Scheduling, System Control and Dispatch are also defined by FERC as Ancillary Services, but not offered or procured in ISO/RTO spot markets1. All these services are used by transmission operators both in the market and non-market environment to operate the system reliably. With the increasing penetration level and share of variable generation resources there may be a need for the definition and requirements for a new Ancillary Service to ensure the reliability of the bulk power system. This new service may be characterized as either "slow Regulation" or "Net Load Following". It is based on the need to have adequate 5-minute dispatchable capacity to counteract the combined fluctuations in load and variable generation. Currently there are no standards for such a product but with the expected increase in the variable generation, availability such a product become important since otherwise the transmission system operator needs to rely on the relatively expensive 4-second Regulation product to follow such fluctuations. This presentation will define the new Ancillary Service, its characteristic, operational requirements, resource types that are most eligible to provide such a service, and will outline how such an Ancillary Service ties in with the existing Energy and Ancillary Service markets.