Variations in the primary control availability : An investigation of market conditions’ influence on the FCR-N product

Abstract: The systematic implementation of intermittent energy production sources has made the energy system more volatile and unpredictable than ever before. This development increases the importance of balancing services, in particular the primary control. However, the current research that has been conducted on the primary regulation products is limited. Specifically, the factors that drive the variation in availability and price of the primary control are unknown and the procurement is in some aspects based on perception rather than quantitative analysis. This study has investigated which these factors are and their relative significance on the availability and price of the primary control product called Frequency Containment Reserve for Normal Operation – FCR-N. The study was conducted according to methods with both qualitative and quantitative aspects to cover the complex nature of the problem from different views. The study was done in collaboration with Fortum POT at their office to gain insight and support from a market actor. Given the research questions, the result from this study is threefold. Firstly, the factors that affect the FCR-N availability have been identified and other factors have been categorised as insignificant. Secondly, the factors’ relative significances are stated to show their dependency with the FCR-N product. Lastly, an outlier case study showed how extreme situations changes the conditions for the FCR-N procurement. It has been concluded that the FCR-N price for normal operation on the Nordic electricity market can be generalised successfully through the identified parameters. It is also shown that deviations from normal operations have the possibility to create deviations in the FCR-N availability, indicating that these hours of extreme values need additional analysis in order to fully understand the available capacity. However, the significance of the researched parameters will be an indication in analysis of both the normal case and during deviations as these are the most important measures for the FCR-N availability and price.