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Title: Analyzing the Impacts of Increased Wind Power on Generation Revenue Sufficiency: Preprint

Abstract

The Revenue Sufficiency Guarantee (RSG), as part of make-whole (or uplift) payments in electricity markets, is designed to recover the generation resources' offer-based production costs that are not otherwise covered by their market revenues. Increased penetrations of wind power will bring significant impacts to the RSG payments in the markets. However, literature related to this topic is sparse. This paper first reviews the industrial practices of implementing RSG in major U.S. independent system operators (ISOs) and regional transmission operators (RTOs) and then develops a general RSG calculation method. Finally, an 18-bus test system is adopted to demonstrate the impacts of increased wind power on RSG payments.

Authors:
; ; ; ; ;
Publication Date:
Research Org.:
National Renewable Energy Lab. (NREL), Golden, CO (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE), Wind and Water Technologies Office (EE-4W)
OSTI Identifier:
1301816
Report Number(s):
NREL/CP-5D00-65387
DOE Contract Number:
AC36-08GO28308
Resource Type:
Conference
Resource Relation:
Conference: Presented at the 2016 IEEE Power and Energy Society General Meeting, 17-21 July 2016, Boston, Massachusetts
Country of Publication:
United States
Language:
English
Subject:
17 WIND ENERGY; make-whole payment; uplifts; revenue sufficiency guarantee; RSG; wind; impact; electricity markets

Citation Formats

Wang, Qin, Wu, Hongyu, Tan, Jin, Hodge, Bri-Mathias, Li, Wanning, and Luo, Cheng. Analyzing the Impacts of Increased Wind Power on Generation Revenue Sufficiency: Preprint. United States: N. p., 2016. Web. doi:10.1109/PESGM.2016.7741858.
Wang, Qin, Wu, Hongyu, Tan, Jin, Hodge, Bri-Mathias, Li, Wanning, & Luo, Cheng. Analyzing the Impacts of Increased Wind Power on Generation Revenue Sufficiency: Preprint. United States. doi:10.1109/PESGM.2016.7741858.
Wang, Qin, Wu, Hongyu, Tan, Jin, Hodge, Bri-Mathias, Li, Wanning, and Luo, Cheng. 2016. "Analyzing the Impacts of Increased Wind Power on Generation Revenue Sufficiency: Preprint". United States. doi:10.1109/PESGM.2016.7741858. https://www.osti.gov/servlets/purl/1301816.
@article{osti_1301816,
title = {Analyzing the Impacts of Increased Wind Power on Generation Revenue Sufficiency: Preprint},
author = {Wang, Qin and Wu, Hongyu and Tan, Jin and Hodge, Bri-Mathias and Li, Wanning and Luo, Cheng},
abstractNote = {The Revenue Sufficiency Guarantee (RSG), as part of make-whole (or uplift) payments in electricity markets, is designed to recover the generation resources' offer-based production costs that are not otherwise covered by their market revenues. Increased penetrations of wind power will bring significant impacts to the RSG payments in the markets. However, literature related to this topic is sparse. This paper first reviews the industrial practices of implementing RSG in major U.S. independent system operators (ISOs) and regional transmission operators (RTOs) and then develops a general RSG calculation method. Finally, an 18-bus test system is adopted to demonstrate the impacts of increased wind power on RSG payments.},
doi = {10.1109/PESGM.2016.7741858},
journal = {},
number = ,
volume = ,
place = {United States},
year = 2016,
month = 8
}

Conference:
Other availability
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  • The Revenue Sufficiency Guarantee (RSG), as part of make-whole (or uplift) payments in electricity markets, is designed to recover the generation resources' offer-based production costs that are not otherwise covered by their market revenues. Increased penetrations of wind power will bring significant impacts to the RSG payments in the markets. However, literature related to this topic is sparse. This paper first reviews the industrial practices of implementing RSG in major U.S. independent system operators (ISOs) and regional transmission operators (RTOs) and then develops a general RSG calculation method. Finally, an 18-bus test system is adopted to demonstrate the impacts ofmore » increased wind power on RSG payments.« less
  • In this paper, a methodology is developed to analyze how ambient and wake turbulence affects the power generation of a single wind turbine within an array of turbines. Using monitoring data from a wind power plant, we selected two sets of wind and power data for turbines on the edge of the wind plant that resemble (i) an out-of-wake scenario (i.e., when the turbine directly faces incoming winds) and (ii) an in-wake scenario (i.e., when the turbine is under the wake of other turbines). For each set of data, two surrogate models were then developed to represent the turbine powermore » generation (i) as a function of the wind speed; and (ii) as a function of the wind speed and turbulence intensity. Support vector regression was adopted for the development of the surrogate models. Three types of uncertainties in the turbine power generation were also investigated: (i) the uncertainty in power generation with respect to the published/reported power curve, (ii) the uncertainty in power generation with respect to the estimated power response that accounts for only mean wind speed; and (iii) the uncertainty in power generation with respect to the estimated power response that accounts for both mean wind speed and turbulence intensity. Results show that (i) under the same wind conditions, the turbine generates different power between the in-wake and out-of-wake scenarios, (ii) a turbine generally produces more power under the in-wake scenario than under the out-of-wake scenario, (iii) the power generation is sensitive to turbulence intensity even when the wind speed is greater than the turbine rated speed, and (iv) there is relatively more uncertainty in the power generation under the in-wake scenario than under the out-of-wake scenario.« less
  • Features of existing wholesale electricity markets, such as administrative pricing rules and policy-based reliability standards, can distort market incentives from allowing generators sufficient opportunities to recover both fixed and variable costs. Moreover, these challenges can be amplified by other factors, including (1) inelastic demand resulting from a lack of price signal clarity, (2) low- or near-zero marginal cost generation, particularly arising from low natural gas fuel prices and variable generation (VG), such as wind and solar, and (3) the variability and uncertainty of this VG. As power systems begin to incorporate higher shares of VG, many questions arise about themore » suitability of the existing marginal-cost-based price formation, primarily within an energy-only market structure, to ensure the economic viability of resources that might be needed to provide system reliability. This article discusses these questions and provides a summary of completed and ongoing modelling-based work at the National Renewable Energy Laboratory to better understand the impacts of evolving power systems on reliability and revenue sufficiency.« less
  • Here, we present a computationally efficient mixed-integer program (MIP) that determines optimal generator expansion decisions, and hourly unit commitment and dispatch in a power system. The impact of increasing wind power capacity on the optimal generation mix and generator profitability is analyzed for a test case that approximates the electricity market in Texas (ERCOT). We analyze three market policies that may support resource adequacy: Operating Reserve Demand Curves (ORDC), Fixed Reserve Scarcity Prices (FRSP) and fixed capacity payments (CP). Optimal expansion plans are comparable between the ORDC and FRSP implementations, while capacity payments may result in additional new capacity. Themore » FRSP policy leads to frequent reserves scarcity events and corresponding price spikes, while the ORDC implementation results in more continuous energy prices. Average energy prices decrease with increasing wind penetration under all policies, as do revenues for baseload and wind generators. Intermediate and peak load plants benefit from higher reserve prices and are less exposed to reduced energy prices. All else equal, an ORDC approach may be preferred to FRSP as it results in similar expansion and revenues with less extreme energy prices. A fixed CP leads to additional new flexible NGCT units, but lower profits for other technologies.« less