Frequency regulation in the Nordic synchronous system : The possibility for solar parks to provide ancillary services

Sammanfattning: The Paris Agreement stipulates that the participating countries and areas agree to work toward limiting the global average temperature increase “to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels” (The United Nations, 2015). One measure to achieve this is to increase the share of renewable power generation. However, when renewable power production becomes more internationally prevalent, the energy system will become less predictable, which creates a need for long distance electricity transmission, often via HVDC (high voltage direct current) cables. If an exporting HVDC cable were to suddenly malfunction, a substantial increase in the grid frequency would occur, which is why a new ancillary market for frequency down-regulation, FCR-D down (Frequency Containment Reserve - Disturbances downward), is being introduced. Generation reduction or load increases will be able to be sold in an insurance-like manner on the FCR-D down market. This research has evaluated the technical feasibility, financial consequences and other potential obstacles for solar farms participating in this new market. It is important to highlight that the premise for this model is specifically tailored to participation in the FCR-D down market in cooperation with the thesis partner company, Krafthem. Through research of the extant literature and interviews, it has been concluded that the purely technical aspect of solar parks participating in the FCR-D down market is not yet at an optimal level, primarily relating to implementation of data transmission and management, simply due to the novelty of the concept of deactivating many solar panels at will. It is nonetheless possible with particular manufacturer’s hardware today, and further technical adaptation is anticipated within the near future, indicating a normalisation of this type of usage. Furthermore, when it comes to the topic of other obstacles, a substantial knowledge gap has been identified in essentially all related actors. It has been described as the most important hindrance for broader and more rapid implementation, as it is reflected in a number of ways, e.g. a difficulty to understand the basic concept of solar power providing ancillary services, as well as a conceptual unwillingness to deactivate solar power generation. It is also unclear of whether certain legal aspects (owner structures and PPA agreements) may affect the solar parks when providing ancillary services. As it is a complex task to provide ancillary services with intermittent energy sources, it requires in-depth technical expertise. It is also both time-consuming and difficult to get approved for participation in the ancillary markets by SvK, which is why the conclusion has  been drawn that there are clear benefits to using aggregators or similar actors to administer the ancillary market-participation of one’s energy assets. In order to analyse the financial consequences, a fictive case study of an investement in a 100 MWp solar park was created in the form of an Excel model. The internal rate of return (IRR) was calculated for the investment of the solar park both without and with providing ancillary services on the FCR-D down market, by forecasting future cash flow of such an investment. For the particular solar park studied, the IRR was found to be, 4,54% and 5,49%, respectively, an improvement of the IRR by 20,81%. Additionally, the IRR of the investment of partering with Krafthem to enter the FCR-D down market was calculated, resulting in an IRR of 924,83%.