5 points to know about microgrids participating in the electricity sales market

At present, China's electricity sales market has just been liberalized, and many electricity sales companies are willing to use microgrids to provide integrated energy services to improve their competitive advantages
.
At the same time, distributed photovoltaic investment companies are also considering how to use microgrids to expand the scope
of power supply and sales to users.
Document No.
9 also explicitly supports microgrids to participate in the electricity market
.
There is no doubt that microgrid will become one of the important forms of
electricity sales to users in China at this stage.
However, there are still in-depth thoughts
on the positioning of microgrid electricity sales entities and how microgrids can participate in the electricity sales market at this stage.

1.
The positioning of microgrids to participate in the power market

For remote areas or island-type independent microgrids, limited by isolation from the main network, the power generation and sales mode is single, and it is not the scope
of this article.

For grid-connected microgrids, the author believes that they can be divided into two categories:

(1) Single user type microgrid
.
For example, a factory user has built a microgrid
containing photovoltaic and energy storage components in his own factory area.
Regardless of whether the relationship between the microgrid and the factory owner belongs to the contract energy management model, the energy service company model or the owner's own investment and self-maintenance model, this type of microgrid should be regarded as the user subject together with the factory user in the electricity market, rather than the electricity sales entity
.
In addition, this type of microgrid users can participate in the electricity market like other users, and the "Implementation Opinions on Promoting the Reform of the Electricity Sales Side" mentions that this type of "users with distributed power sources or microgrids can entrust electricity sales companies to act as agents for electricity purchase and sales business";

(2) Form a local area network to supply power
to multiple user subjects.
For example, a microgrid in an industrial park provides power
to several different users at the same time.
The voltage level of this type of microgrid is generally 10kV~110kV, and there is a single grid-connected point (PCC point) with the public grid, and the connection diagram between the microgrid and the public grid is shown in Figure 1
.
The part below the PCC point belongs to the incremental distribution network part invested and constructed by the microgrid entity, and is responsible for the operation
of the distribution network.
According to the definition of electricity sales companies in the Implementation Opinions on Promoting the Reform of the Electricity Sales Side, the entities of this type of microgrid should belong to the second category of electricity sales companies, that is, electricity sales companies
with the right to operate the distribution network.
At the same time, according to the ownership of the distributed power supply in the network by the microgrid entity, the microgrid entity can be further divided into the issuance and sales integration company and the placement integration company
.

According to the above analysis, the main positioning of microgrids participating in the electricity market can be divided into user entities and the second type of electricity sales companies, of which the latter can be further divided into issuance and sales integration companies and placement integration companies
.
The market player positioning of microgrids is shown in Figure 2
.

This paper will further discuss the power sales issues
related to microgrids that form local area networks.

Figure 1 The connection relationship between microgrid and public power grid

Figure 2 The main positioning of microgrids participating in the power market

2.
Access conditions for microgrid entities

The access conditions for a single user-type microgrid to participate in the market as a user subject are consistent
with the access conditions for general power users.

For the formation of a local area network microgrid electricity sales entity, the access conditions should consider the following factors:

l As a second-class electricity sales company, relevant asset requirements, credit requirements, industrial and commercial registration requirements, etc.
, as well as power supply power business licenses
.
For details, please refer to the relevant provisions of the Implementation Opinions on Promoting the Reform of the Electricity Sales Side;

l Meet the conditions of
microgrid access system.
The Implementation Opinions on Promoting the Reform of the Electricity Sales Side specifically mentioned that microgrids as direct transaction users "should meet the conditions for microgrid access systems";

l Electricity business license for power generation (depending on the specific situation).

If the microgrid entity has distributed generation resources in the grid, it should also obtain a power generation business license
for the power supply above the scale specified in the document.
The Notice of the National Energy Administration on Matters Related to the Clarification of the Administration of Power Business Licenses (Guoneng Qualification [2014] No.
151) exempts the following power business licenses for power generation businesses:

1) Distributed generation projects that have been specified by the competent energy department by filing (approval) and other means;

2) Small hydropower stations with an installed capacity of less than 1MW (excluded) per station;

3) New energy power generation projects such as solar, wind, biomass, marine and geothermal energy with an installed capacity of 6MW or less;

4) Power generation projects with an installed capacity of 6MW (excluded) or less than a comprehensive utilization of waste heat and pressure resources;

5) Non-fossil fuel direct combustion self-owned power stations
dispatched by dispatching agencies at the prefecture (city) level and below.

At the same time, the notice simplifies the following power generation business license application requirements:

1) Small hydropower with a total installed capacity of less than 6MW (excluded);

2) New energy power generation such as solar energy, wind energy, biomass energy, marine energy, and geothermal energy;

3) Comprehensive utilization of waste heat and pressure resources for power generation
.

3.
The business model and power source of microgrid electricity sales

According to the previous analysis, microgrid electricity sales entities should be divided into two categories:

l A microgrid electricity sales company with integrated issuance and distribution, that is, the distributed power assets in the microgrid belong to the main body of the microgrid;

l A microgrid electricity sales company with integrated placement, that is, the distributed power assets in the microgrid do not belong to the main body of the microgrid;

The business models of the above two types of microgrid electricity sales entities include charging electricity energy fees to users who select the microgrid sales company in the grid and charging distribution network crossing fees
within the microgrid.
The difference lies in the power source:

(1) A microgrid electricity sales company that integrates issuance and distribution

Since this type of electricity sales company has a distributed power source in the microgrid, according to the basic principle of nearby consumption of distributed power source, the electricity generated by the distributed power supply should first be sold to the users in the microgrid for consumption, and the insufficient part should be obtained by the microgrid electricity sales company through centralized markets or bilateral transactions with power plants;

(2) Placing and selling integrated microgrid electricity sales companies

Distributed photovoltaic, distributed wind turbine and distributed triple gas supply turbine are the main distributed power supply entities in the microgrid, according to the "Implementation Opinions on the Orderly Development and Development of Electricity Consumption Plan", these power sources are currently in the category of priority power generation, do not participate in market competition, and need to be fully acquired
by power supply enterprises.
Therefore, as the only power supply enterprise in the region, the microgrid electricity sales company with integrated placement should first purchase the electricity of each distributed power source entity in full, and the insufficient part should be obtained by the microgrid electricity sales company through centralized markets or bilateral transactions with power plants
.

4.
Sale plan of microgrid surplus electricity

According to the spirit of the relevant documents, the microgrid should not restrict the power generation of distributed photovoltaics, distributed wind power and distributed trigeneration units "fixed by heat", so it is likely that at some point there will be a phenomenon
that the power generation power of the power supply in the microgrid is greater than the power load and is reversed to the public grid.
The author believes that at this stage, the public grid company can provide "guaranteed reception" services for the distributed power surplus power that cannot be absorbed by this part of the microgrid, and then consider this part of the electricity to participate in market competition
after the further development of China's electricity market.

It should be noted that since the on-grid electricity prices of distributed photovoltaic, distributed wind power and distributed trigeneration units are not the same, and in the case of several power sources generating electricity at the same time and there is electricity consumption by microgrid users, the public grid needs to consider what kind of electricity price principle to receive this part of the surplus electricity
.

5.
Competition between microgrid electricity sales entities and other electricity sales companies

The Implementation Opinions on Promoting the Reform of the Electricity Sales Side stipulates that there can be multiple electricity sales companies in the same power supply business area, but only one company can have the right to operate the distribution network and provide guaranteed power supply services
.
As a power sales company with the right to operate the distribution network in the region, the microgrid electricity sales company will face competition from other third-class electricity sales companies for in-grid users
.

The advantages of microgrid electricity sales companies over other third-class electricity sales companies are:

(1) If the microgrid provides integrated energy supply services for cooling, heating and electricity, the microgrid electricity sales company can package the cooling, heating and electricity services and formulate corresponding packages, and the competitive advantage is more obvious;

(2) The distributed power source in the microgrid belongs to clean energy, and users have a higher degree of acceptance of green power supply;

(3) Users with high requirements for power supply reliability are more willing to sign up with microgrid electricity sales companies
.
Microgrids can operate in isolation in the event of grid failures, providing higher safety assurance and continuous power supply capability
.

6.
Conclusion

With the advancement of microgrid technology and the advancement of China's electric power reform, the participation of microgrids in the power market is becoming a trend
.
Only sound and reasonable market rules can promote the healthy development of the microgrid market and drive the innovation
of related business models.

This article only discusses how to participate in the electricity sales market at this stage before the introduction of the implementation rules for microgrid electricity sales
.
Can microgrids be regarded as second-class electricity sales companies with distribution network operations? Will microgrid electricity sellers face competition from other third-class electricity sales companies? How to acquire distributed power generation in the microgrid? A series of issues need to be further explored and summarized in practice
.

[The author of this article is Mr.

Wu Junhong of the East China Branch of the National Electric Power Planning Research Center and the System Planning Research Center of the East China Electric Power Design Institute.
】

The author himself declares: This article only represents the author's own views, and has nothing to do with
the author's work.
The author's cognitive level is limited, and we apologize for any inaccuracies, and welcome corrections
.