Dynamic Reserves for Managing Wind Power

TL;DR

This paper introduces a method for calculating dynamic reserves to better manage wind power volatility in electricity markets, improving reliability and efficiency in market clearing processes.

Contribution

It formalizes the concept of dynamic reserves for wind power and proposes an optimal strategy that minimizes reserves while ensuring high confidence and truthful bidding.

Findings

Dynamic reserves adapt to wind power uncertainty.

The proposed strategy reduces reserve requirements.

Analysis based on NYISO data demonstrates effectiveness.

Abstract

In this paper, we suggest that reserves must be computed dynamically to account for wind power volatility. We formalize the notion of dynamic reserves in support of sequential Day-Ahead-Market (DAM) and Real-Time-Market (RTM) clearing and discuss several ways of accounting for wind power uncertainties. Three different wind integration protocols are considered and their impact on stakeholders, and, notably, on the need for dynamic reserves is analyzed. An optimal strategy is proposed which requires the least reserve as long as the bids are truthful and implementable with high confidence. This can be checked by the existing market monitor and/or by a separate risk buro. Concepts are illustrated in part using publicly available information about NYISO.