A Scenario-oriented Approach for Energy-Reserve Joint Procurement and Pricing

TL;DR

This paper introduces a scenario-oriented method for joint energy-reserve procurement and pricing in electricity markets, ensuring cost efficiency and revenue adequacy across all contingencies and fluctuations.

Contribution

It presents a novel scenario-based model for reserve procurement and a new locational marginal pricing approach that guarantees revenue balance and system reliability.

Findings

Reserve is procured based on all possible contingencies and fluctuations.

The proposed pricing approach ensures revenue adequacy for the system operator.

Payments and congestion rents are balanced in all scenarios.

Abstract

We propose a scenario-oriented approach for energy-reserve joint procurement and pricing for electricity market. In this model, without the empirical reserve requirements, reserve is procured according to all possible contingencies and load/renewable generation fluctuations with the minimum expected system total cost. The innovative locational marginal pricing approach for loads, generations and reserve and the associated settlement process are proposed. We show that payments from loads, payments to generators and congestion rent will reach their balance in the basecase as well as in all scenarios, so that revenue adequacy can be guaranteed for the system operator.