Electric Power Systems Research 81 (2011) 1866–1873 Contents lists available at ScienceDirect Electric Power Systems Research j ourna l ho me p a ge: www.elsevier.com/locate/epsr Cost assessment of efficiency losses in hydroelectric plants J.C. Galvis a , A. Padilha-Feltrin a,∗ , J.M. Yusta Loyo b a UNESP – State University of São Paulo, Department of Electrical Engineering, Ilha Solteira, SP, 15385-000, Brazil b UNIZAR – University of Zaragoza, Department of Electrical Engineering, Zaragoza, 50018, Spain a r t i c l e i n f o Article history: Received 5 July 2010 Received in revised form 6 April 2011 Accepted 16 May 2011 Keywords: Ancillary services Efficiency losses Hydroelectric generators Operating reserve a b s t r a c t Some important real-time tasks of the independent system operator (ISO) are the monitoring and control of power system events (load deviations and contingencies). These events are usually managed by the ISO using operating reserve ancillary services. These services represent an additional capacity (MW) available in generators and some interruptible loads. Generators must change their operating points in order that this capacity can remain available. These changes might lead to efficiency losses in energy production. In systems with a high percentage of hydroelectric production, hydroelectric plants need to know the impact of ancillary services on their profits. This work therefore analyzes the cost of efficiency losses due to operating reserve availability in hydroelectric generators. A method to calculate this cost component is proposed using a unit commitment dispatch for a single hydroelectric plant. This dispatch is performed without considering the operating reserve availability and is compared with the traditional dispatch, which takes into account the availability of operating reserve. The proposal is used to calculate the cost of efficiency losses on a Brazilian hydroelectric generator. We found that the cost of efficiency losses can be considerable when compared to the incomes of a hydroelectric plant in the short-term market. © 2011 Elsevier B.V. All rights reserved. 1. Introduction Operating reserve services are used in frequency control to compensate for load deviations and contingencies. To this end, the independent system operator (ISO) asks some users (genera- tors or interruptible loads) for reserve supplies. Generators supply additional capacity to cover load deviations and contingencies. Interruptible loads provide reserve through a partial or total reduc- tion of the load. The ISO provides operating reserve services through any of the following methods: compulsory provision, bilateral contracts, long- or short-term markets or a combination thereof [1]. Some studies illustrate market mechanisms for reserve pric- ing [2–5]. On the other hand, other studies show pricing reserve methods without considering a market mechanism [6,7]. Choos- ing among those alternatives is a challenging task that depends on many factors, including system requirements, existing mar- ket structure, regulations and the economy [8]. Regardless of the scheme used, it is important that generators assess the cost of the operating reserve so that this cost can be appropriately budgeted. In the Brazilian system, 84% of energy production comes from hydroelectric resources. In this system, the operating reserve sup- ply used for frequency control is compulsory and does not add any ∗ Corresponding author. Tel.: +55 18 37431169; fax: +55 18 37431163. E-mail addresses: juancgalvis@gmail.com (J.C. Galvis), padilha@dee.feis.unesp.br (A. Padilha-Feltrin), jmyusta@unizar.es (J.M.Y. Loyo). cost for users [9]. Because hydroelectric plants provide most of the reserve, it is important to calculate the cost of reserve availability for this type of producer. The contribution of this paper is twofold: • It analyzes the cost of efficiency losses in hydroelectric plant pro- duction due to operating reserve availability. • It proposes a method of assessment that can show network users the value and significance of this cost component. Moreover, a regulatory entity and the ISO may also be inter- ested in the proposed method. The regulator may use the proposal to evaluate costs and define specific tariffs for operating reserve services. The ISO may take into account this method as an addi- tional criteria in the generation dispatch in order to reduce system operation costs. The paper is organized as follows. First, Section 2 illustrates the classification and cost components associated with operating reserve. Next, Section 3 describes relevant aspects of the Brazilian market while Section 4 discusses the cost of efficiency losses in the production of hydroelectric plants. Section 5 shows a unit commit- ment dispatch for a single hydroelectric plant in order to calculate this cost component. In Section 6, the proposal is used to calculate the cost of efficiency losses on a Brazilian hydroelectric generator. Finally, Section 7 provides an outline of research conclusions. 0378-7796/$ – see front matter © 2011 Elsevier B.V. All rights reserved. doi:10.1016/j.epsr.2011.05.006