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Title: Wholesale Electricity Market Design with Increasing Levels of Renewable Generation: Incentivizing Flexibility in System Operations

Abstract

This paper discusses the importance and challenges of incentivizing flexibility during short-term operations of the bulk power system due to the increasing variability and uncertainty from growing penetrations of variable generation (VG). Operational flexibility can refer to many aspects of a resource's capability to support the power system, such as the speed, range, and duration of power output, as well as the ability to autonomously respond to frequency or voltage changes. Inefficient utilization of existing flexibility, or unwillingness of resources to provide flexibility, can compromise system reliability by not meeting the changing net load, and it can also lead to higher costs when an inefficient use of flexibility resources occurs. There are many existing characteristics of market design that incentivize flexibility in some manner. How they incentivize the provision of flexibility as well as the level of flexibility is still debated. We explore some of these existing market designs, as well as new market mechanisms, such as pay-for-performance regulating reserve and flexible ramping products, that aim to explicitly incentivize the provision of more flexibility to the system, particularly as a result of increasing VG penetration levels.

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:
1329361
Report Number(s):
NREL/JA-5D00-66275
Journal ID: ISSN 1040-6190
DOE Contract Number:  
AC36-08GO28308
Resource Type:
Journal Article
Resource Relation:
Journal Name: Electricity Journal; Journal Volume: 29; Journal Issue: 4
Country of Publication:
United States
Language:
English
Subject:
24 POWER TRANSMISSION AND DISTRIBUTION; 29 ENERGY PLANNING, POLICY, AND ECONOMY; electricity markets; variable generation; variability; uncertainty; flexibility; ancillary services

Citation Formats

Ela, Erik, Milligan, Michael, Bloom, Aaron, Botterud, Audun, Townsend, Aaron, Levin, Todd, and Frew, Bethany A. Wholesale Electricity Market Design with Increasing Levels of Renewable Generation: Incentivizing Flexibility in System Operations. United States: N. p., 2016. Web. doi:10.1016/j.tej.2016.05.001.
Ela, Erik, Milligan, Michael, Bloom, Aaron, Botterud, Audun, Townsend, Aaron, Levin, Todd, & Frew, Bethany A. Wholesale Electricity Market Design with Increasing Levels of Renewable Generation: Incentivizing Flexibility in System Operations. United States. doi:10.1016/j.tej.2016.05.001.
Ela, Erik, Milligan, Michael, Bloom, Aaron, Botterud, Audun, Townsend, Aaron, Levin, Todd, and Frew, Bethany A. Sun . "Wholesale Electricity Market Design with Increasing Levels of Renewable Generation: Incentivizing Flexibility in System Operations". United States. doi:10.1016/j.tej.2016.05.001.
@article{osti_1329361,
title = {Wholesale Electricity Market Design with Increasing Levels of Renewable Generation: Incentivizing Flexibility in System Operations},
author = {Ela, Erik and Milligan, Michael and Bloom, Aaron and Botterud, Audun and Townsend, Aaron and Levin, Todd and Frew, Bethany A.},
abstractNote = {This paper discusses the importance and challenges of incentivizing flexibility during short-term operations of the bulk power system due to the increasing variability and uncertainty from growing penetrations of variable generation (VG). Operational flexibility can refer to many aspects of a resource's capability to support the power system, such as the speed, range, and duration of power output, as well as the ability to autonomously respond to frequency or voltage changes. Inefficient utilization of existing flexibility, or unwillingness of resources to provide flexibility, can compromise system reliability by not meeting the changing net load, and it can also lead to higher costs when an inefficient use of flexibility resources occurs. There are many existing characteristics of market design that incentivize flexibility in some manner. How they incentivize the provision of flexibility as well as the level of flexibility is still debated. We explore some of these existing market designs, as well as new market mechanisms, such as pay-for-performance regulating reserve and flexible ramping products, that aim to explicitly incentivize the provision of more flexibility to the system, particularly as a result of increasing VG penetration levels.},
doi = {10.1016/j.tej.2016.05.001},
journal = {Electricity Journal},
number = 4,
volume = 29,
place = {United States},
year = {Sun May 01 00:00:00 EDT 2016},
month = {Sun May 01 00:00:00 EDT 2016}
}