A contingency is the unexpected failure or outage of a system component, such as a generator, transmission line, circuit breaker, switch or other electrical element. Power system operators maintain constant vigilance against contingencies by operating the system with safety margins and backup plans. Part of the backup plan is to have power plants waiting in reserve - we call this contingency reserve (AKA: CR). While a complete taxonomy of CR is beyond the scope, the two basic varieties of reserve are spinning and non-spinning reserve.
Vocabulary Intermission part 1
Spinning Reserve: Unused capacity available from units connected to and synchronised with the grid available to respond instantly to system requirements. A 500 MW power plant operating at 400 MW provides 100 MW of spinning reserve to the system.
Non-Spinning Reserve: 1. Generating reserve not connected to the system but capable of serving demand within a specified time. 2. Interruptible load that can be removed from the system in a specified time.
Contingency reserve requirements are set in the same general way insurance rates are set. We are all familiar with the idea that people with clean driving histories are rewarded with lower car insurance rates so it should come as no surprise that power systems with safer characteristics are similarly rewarded with lower CR requirements. Question is, what's the equivalent of a speeding ticket or a traffic accident for the power system? It turns out the power system has a points system.
Vocabulary Intermission part 2
Thermal: A term used to identify a type of electric generating station, capacity, or capability, or output in which the source of energy for the prime mover is heat. There's a tendency to associate the term thermal with fossil fueled power stations (coal, natural gas, oil) but this designation also applies to nuclear, geothermal and solar thermal power plants.
Hydro: A term used to identify a type of electric generating station, capacity, or capability, or output in which the source of energy for the prime mover is falling water.
Ramp Rate or Ramp: The rate, expressed in megawatts per minute, that a generator changes its output.
Firm Energy (G-F): NERC e-Tag code - This product may be curtailed only in the event of a reliability condition or to meet the Seller’s public utility or statutory obligations for reliability of service to native load. A G-F product cannot be interrupted for economic reasons.
Non-Firm Energy (G-NF): NERC e-Tag code - This product may be interrupted for any reason or no reason, without liability on the part of either the buyer or seller.
N-1 :A single system contingency event involving the loss of one component.
Points System - Step 1
Hydroelectric units can generally ramp up and down at higher rates than thermal units. This characteristic allows hydroelectric units to more readily respond to system contingencies. This responsiveness is a form of risk control and as such hydro units are only required to carry 5% in contingency reserves while slower acting thermal units need to carry 7%. So, if a power system is supplying load with 1000 MW of hydro and 1000 MW of thermal it will need to carry 50 MW of CR to cover hydro and 70 MW of CR to cover the thermal contribution. Note: This example assumes the thermal and hydro contracts are all Firm Energy products (G-F).
Points System - Step 2
At least half of the contingency reserve requirement will need to be in the form of spinning reserve.
Points System - Step 3
All non-Firm contracts will need to be 100% covered with contingency reserves. If the power system mentioned previously has 1000 MW of non-Firm Energy in addition to the hydro and thermal generation it will need to carry 50 and 70 MW of CR to cover hydro and thermal respectively as well as 1000 MW to cover the non-Firm Energy contracts.
Points System - Wildcard
Exceptional situations require system operators to carry contingency reserves above and beyond those described by the recipe above.
I think/hope that covers the basics.