Pricing the Ramping Reserve and Capacity Reserve in Real Time Markets

TL;DR

This paper introduces a new pricing method for ramping and capacity reserves in real-time electricity markets, using robust optimization to enhance system reliability amid renewable energy uncertainties.

Contribution

It proposes a novel concept of deliverable generation ramping reserve and derives associated prices within an affine robust optimization framework.

Findings

Ramping and capacity reserve prices are successfully derived.

Simulations demonstrate the effectiveness of the proposed pricing scheme.

Market impacts and reserve value insights are discussed.

Abstract

The increasing penetration of renewable energy in recent years has led to more uncertainties in power systems. In order to maintain system reliability and security, electricity market operators need to keep certain reserves in the Security-Constrained Economic Dispatch (SCED) problems. A new concept, deliverable generation ramping reserve, is proposed in this paper. The prices of generation ramping reserves and generation capacity reserves are derived in the Affine Adjustable Robust Optimization framework. With the help of these prices, the valuable reserves can be identified among the available reserves. These prices provide crucial information on the values of reserve resources, which are critical for the long-term flexibility investment. The market equilibrium based on these prices is analyzed. Simulations on a 3-bus system and the IEEE 118-bus system are performed to illustrate the concept of ramping reserve price and capacity reserve price. The impacts of the reserve credit on market participants are discussed.