Your browser does not support JavaScript!
http://iet.metastore.ingenta.com
1887

access icon free Energy and reserve co-optimisation – reserve availability, lost opportunity and uplift compensation cost

© The Institution of Engineering and Technology
Received 08/05/2018, Accepted 16/10/2018, Revised 28/09/2018, Published 25/10/2018

Ancillary services used for active power balancing are called balancing services or operating reserves and their provision is vital for maintaining power system frequency at the nominal value. In a deregulated environment, where generation is unbundled from transmission and distribution operations, independently owned generating companies may elect to provide operating reserves. However, it is not easy to calculate the exact cost of reserve provision and, therefore, bid for it accurately. Although the cost efficiency of reserve provision can be improved by co-optimising energy and reserve markets, generating companies can still encounter monetary losses caused by the provision of reserve. Currently, these losses are compensated based on ex-post calculations. Hence, current energy and reserve prices do not adequately factor in the ex-post compensation caused by reserve provision. This study proposes an energy and reserve co-optimisation with an explicit consideration of two compensation mechanisms, i.e. lost opportunity and uplift payments. The problem is structured as a bilevel model. The upper level is a mixed-integer unit commitment problem and the lower level is a continuous economic dispatch problem. The case study shows that the proposed model increases market efficiency.

Inspec keywords: power transmission economics; power markets; power generation dispatch; power distribution economics; integer programming

Other keywords: lost opportunity compensation mechanism; reserve availability; balancing services; deregulated environment; reserve provision; bilevel model; ancillary services; market efficiency; uplift payments compensation mechanism; operating reserves; transmission operation; uplift compensation cost; power system frequency; energy market co-optimisation; continuous economic dispatch problem; active power balancing; distribution operation; mixed-integer unit commitment problem; reserve market co-optimisation

Subjects: Power system management, operation and economics; Optimisation techniques; Distribution networks

References

    1. 1)
      • 5. Pavić, I., Capuder, T., Kuzle, I.: ‘Low carbon technologies as providers of operational flexibility in future power systems’, Appl. Energy, 2016, 168, pp. 724–738.
    2. 2)
      • 18. Hua, B., Baldick, R.: ‘A convex primal formulation for convex hull pricing’, IEEE Trans. Power Syst., 2017, 32, (5), pp. 3814–3823.
    3. 3)
      • 4. Pavić, I., Capuder, T., Kuzle, I.: ‘Value of flexible electric vehicles in providing spinning reserve services’, Appl. Energy, 2015, 157, pp. 60–74.
    4. 4)
      • 7. Zhou, Z., Levin, T., Conzelmann, G.: ‘Survey of U. S. Ancillary services markets’, Argonne National Laboratory, Chicago, 2016.
    5. 5)
      • 11. Patton, D.B., LeeVanSchaick, P., Chen, J.: ‘2015 assessment of the ISO New England electricity markets’, Potomac Econ., 2016.
    6. 6)
      • 12. Hummon, M., Denholm, P., Jorgenson, J., et al: ‘Fundamental drivers of the cost and price of operating reserves’, U.S. Department of Energy Office of Scientific and Technical Information, 2013, available at: https://www.osti.gov/biblio/1089587.
    7. 7)
      • 1. Galiana, F.D., Bouffard, F., Arroyo, J.M., et al: ‘Scheduling and pricing of coupled energy and primary, secondary, and tertiary reserves’, Proc. IEEE, 2005, 93, (11), pp. 1970–1983.
    8. 8)
      • 2. Rebennack, S., Pardalos, P.M., Pereira, M.V., et al: ‘Handbook of power systems I’ (Springer, Berlin, 2010).
    9. 9)
      • 16. Gribik, P.R., Hogan, W.W., Pope, S.L.: ‘Market-clearing electricity prices and energy uplift’, [Online] Available at: www.lmpmarketdesign.com/papers/Gribik_Hogan_Pope.pdf, 2007.
    10. 10)
      • 9. Hogan, W.W.: ‘Electricity market design and efficient pricing: applications for New England and beyond’, Electricity Journal, 2014, 27, (7), pp. 23–49.
    11. 11)
      • 8. EI-Fact Sheet 2015–01.: ‘The current electricity market design in Europe’, KU Leuven Energy Institute, 2015.
    12. 12)
      • 19. Federal Energy Regulatory Commission: ‘Uplift in RTO and ISO Markets’, 2014.
    13. 13)
      • 22. ‘Eastern Wind Dataset’, NREL, Golden, CO, USA, [Online]. Available at: www.nrel.gov/electricity/transmission/ eastern_wind_methodology.html, 2012.
    14. 14)
      • 23. Krishnamurthy, D., Member, S., Li, W., et al: ‘An 8-zone test system based on ISO New England data: development and application’, IEEE Trans. Power Syst., 2016, 31, (1), pp. 234–246.
    15. 15)
      • 15. Gan, D., Litvinov, E.: ‘Energy and reserve market designs with explicit consideration to lost opportunity costs’, IEEE Trans. Power Syst., 2003, 18, (1), pp. 53–59.
    16. 16)
      • 17. Schiro, D.A., Zheng, T., Zhao, F., et al: ‘Convex hull pricing in electricity markets: formulation, analysis, and implementation challenges’, IEEE Trans. Power Syst., 2016, 31, (5), pp. 4068–4075.
    17. 17)
      • 21. Fortuny-Amat, J., McCarl, B.: ‘A representation and economic interpretation of a two-level programming problem’, J. Oper. Res. Soc., 1981, 32, pp. 783–792.
    18. 18)
      • 13. PJM.: ‘A review of generation compensation and cost elements in the PJM markets’, PJM, 2009.
    19. 19)
      • 6. Ellison, J.F., Tesfatsion, L.S., Loose, V.W.: ‘A survey of operating reserve markets in U.S. ISO/RTO-managed electric energy regions’, Energy Economics, 2012.
    20. 20)
      • 3. FERC.: ‘Energy primer’, Washington DC, 2015.
    21. 21)
      • 10. Hogan, W.W.: ‘Electricity scarcity pricing through operating reserves’, Econ. Energ. Environ. Pol., 2013, 2, (2), pp. 65–86.
    22. 22)
      • 14. Al-abdullah, Y.M., Member, S., Abdi-khorsand, M., et al: ‘The role of out-of-market corrections in day-ahead scheduling’, IEEE Trans. Power Syst., 2015, 30, (4), pp. 1937–1946.
    23. 23)
      • 20. Pandžić, H., Qiu, T., Kirschen, D.S.: ‘Comparison of state-of-the-art transmission constrained unit commitment formulations’. Proc. IEEE Power and Energy Society General Meeting, Vancouver, BC, Canada, 2013, pp. 1–5.
http://iet.metastore.ingenta.com/content/journals/10.1049/iet-gtd.2018.5480
Loading

Related content

content/journals/10.1049/iet-gtd.2018.5480
pub_keyword,iet_inspecKeyword,pub_concept
6
6
Loading
Print this page
This is a required field
Please enter a valid email address