Stochastic risk-sensitive market integration for renewable energy: Application to ocean wave power plants

Sedzro, Kwami Senam A.; Kishore, Shalinee; Lamadrid, Alberto J.; Zuluaga, Luis F.

doi:10.1016/j.apenergy.2018.07.091

Stochastic risk-sensitive market integration for renewable energy: Application to ocean wave power plants

Journal Article · Thu Aug 09 04:00:00 EDT 2018 · Applied Energy

DOI:https://doi.org/10.1016/j.apenergy.2018.07.091· OSTI ID:1471479

Sedzro, Kwami Senam A. ^[1]; Kishore, Shalinee ^[2]; Lamadrid, Alberto J. ^[2]; Zuluaga, Luis F. ^[2]

National Renewable Energy Lab. (NREL), Golden, CO (United States)
Lehigh Univ., Bethlehem, PA (United States)

With the expected increase of intermittent renewable energy resources on the electric power grid, short-term reserve markets can prove to be a critical reliability asset. This paper introduces and tests a potential market structure that includes a short-term reserve market for renewable resources where the realized energy is drawn within the bounds of the hourly capacity offered. The study presents a risk-aware stochastic model that determines, based on the day-ahead offer derived using a classic newsvendor formula, the best intraday offers for a renewable energy power plant. The stochastic approach takes into account the uncertainties of energy production and market prices. The proposed risk-sensitive model aims to maximize the renewable power plant's revenues and minimize potential risks of loss in a multi-product multi-timescale market setup. To demonstrate the effectiveness of the proposed formulation, we study the case of a hypothetical 750-kW wave power plant coupled with energy storage. The study shows that the risk of profit loss is not uniformly distributed across the risk-aversion factor space. We also find that the introduction of the short-term reserve market results in a wider range of conditional value at risk while inducing 5% profit increase and a lower profit reduction across the risk range. In addition, the study reveals that the short-term reserve market is profitable for both the system operator and the wave energy power plant considered.

View Accepted Manuscript (DOE)

Research Organization:: National Renewable Energy Lab. (NREL), Golden, CO (United States)

Sponsoring Organization:: National Science Foundation (NSF)

Grant/Contract Number:: AC36-08GO28308

OSTI ID:: 1471479

Alternate ID(s):: OSTI ID: 1703570

Report Number(s):: NREL/JA--5D00-71360

Journal Information:: Applied Energy, Journal Name: Applied Energy Journal Issue: C Vol. 229; ISSN 0306-2619

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

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