Frequency Regulation

Summary

In bulk power systems operations, such as the one run by ERCOT, Ancillary Services are used to ensure a continued balance of supply and demand to compensate for what is not covered by the five-minute energy market [1]. Among such services is frequency regulation services (Reg. Up/Down), deployed every four seconds, which is the focus of this study.

We use publicly available data [2] to analyze existing deployment patterns exercised by ERCOT to determine the physical and economic feasibility of blockchain-based frequency regulation services. We use large-scale synthetic networks [3] to simulate the transient response of frequency to such regulation.

For example, the animation shown here, based on a simulation, demonstrates how frequency drop throughout a Texas-sized transmission grid propagates in response to a generator outage. In this example, large loads throughout the states are asked to ramp their consumption down to help restore the frequency. We explore the potential of using bitcoin mining loads to provide such services.

How does ERCOT deploy Reg. Up/Down based on frequency?

We investigate on what basis ERCOT deploys Reg. Up and Reg. Down.

Based on ERCOT data [2] from May 1, 2022 (shown below), sampled every 4 seconds, we observe an inverse relationship between frequency deviation from 60 Hz and Reg. Up/Down increments. For example, from 1:43 PM to 1:53 PM, the frequency continues to drop, and in response, ERCOT ramps up its regulation deployment by about 700 MW, switching from a net "Reg. Down" to a net "Reg. Up" at around 1:50 PM.

Market-Cleared Reg. Up/Down vs. Actually Deployed

Based on ERCOT data [2] from the Spring of 2022 (hourly data, shown below), we observe that ERCOT only deploys less than a quarter of the capacity cleared in the Ancillary Services Market.

How Can A Bitcoin Miner Profit from Regulation?

When ERCOT clears the market, it determines the system-wide "Market-Cleared Prices for Capacity" (in $/MW), and all resource entities cleared for capacity are paid at that price. We explore, using the same dataset from before, the economic benefit of having some Bitcoin mining facilities participate in this Regulation market. A subset of the data, from the Summer of 2022, reveals that there are certain hours of the day where it's a win-win, i.e. for both the mining facilities and for ERCOT's load-serving entities, if such facilities were to offer Reg. Up. During such hours, ERCOT would request such facilities to reduce their "hash rate" to help elevate the frequency.

References

[1] N. Mago (2021). Item 18: 2022 ERCOT Methodologies for Determining Minimum Ancillary Service Requirements [PowerPoint slides]. Available: https://www.ercot.com/files/docs/2021/12/02/18_2022_ERCOT_Methodologies_for_Determining_Minimum_AS_Requirements.pdf

[2] Electric Reliability Council of Texas. [Online]. Available: https://www.ercot.com