The market for spinning reserve and its impacts on energy prices

To make the energy market reliable and transactions deliverable, transmission owners must provide the necessary ancillary services that are critical to ensure transmission open access and power quality. Spinning reserve is one of important ancillary services to maintain system reliability in case of contingency. By definition, spinning reserve is the unloaded section of synchronized that is able to respond immediately to serve load, and is fully available within ten minutes. Since the spinning reserve must be provided by the synchronized units (pumped hydro units and/or interruptible load for some ISOs), these units can either provide energy or spinning reserve or both based on their bids. Study shows that spinning reserve requirements have significant impacts on the energy market. Transmission congestion may reallocate spinning reserve among generators to release the overloads. Different market structures for spinning reserve have been investigated and illustrated by a small example. Different ISO's (California, PJM, New York, and New England) practices on spinning reserve market have been summarized and commented. A new spinning reserve market structure is proposed to best utilize the available resources to meet load and spinning reserve requirement with the transmission constraints.