A Locational Price for Power Injection Fluctuations of Variable Generation and Load

TL;DR

This paper introduces a locational price for power injection fluctuations, called LPV, which helps allocate regulation reserve costs and value distributed energy storage for mitigating variability in power systems.

Contribution

It proposes a novel locational pricing method for power variability, enabling better cost allocation and valuation of storage and regulation services.

Findings

LPV can be used to allocate regulation reserve costs by location.

LPV provides a basis for valuing distributed energy storage.

Policy considerations are discussed for implementing LPV.

Abstract

In this paper we calculate the incremental system production cost associated with a measure of locational power injection uncertainty that can be interpreted as a locational price for tracking power fluctuations. This Locational Price of Variability (LPV) can be used to allocate charges for regulation reserves by location, and hence, can also be used to value distributed energy storage employed to mitigate such fluctuations. We consider policy changes that could enable the implementation of the LPV.