Flexible Ramping Product Procurement in Day-Ahead Markets

TL;DR

This paper introduces a two-pass methodology for procuring flexible ramping products in day-ahead markets, using stochastic unit commitment to optimize costs and set effective FRP requirements.

Contribution

It presents a novel two-pass approach that explicitly considers uncertainty and variability in load to improve FRP procurement and reduce overall costs.

Findings

Reduces expected total operating costs compared to benchmarks.

Aligns DAM decisions with stochastic unit commitment outcomes.

Prevents high costs from FRP deployment through preemptive procurement.

Abstract

This article puts forward a methodology for procuring flexible ramping products (FRPs) in the day-ahead market (DAM). The proposed methodology comprises two market passes, the first of which employs a stochastic unit commitment (SUC) model that explicitly evaluates the uncertainty and the intra-hourly and inter-hourly variability of net load so as to minimize the expected total operating cost. The second pass clears the DAM while imposing FRP requirements. The cornerstone of our work is to set the FRP requirements at levels that drive the DAM decisions toward the optimal SUC decisions. Our methodology provides an economic underpinning for the stipulated FRP requirements, and it brings forth DAM awards that reduce the costs toward the expected total cost under SUC, while conforming to the chief DAM design principles. By preemptively considering the dispatch costs before awarding FRPs, it can further avert unexpectedly high costs that could result with the deployment of procured FRPs. We conduct numerical studies and lay out the relative merits of the proposed methodology vis-\`a-vis selected benchmarks based on various evaluation metrics.