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Market Pricing and Settlements Analysis Considering Capacity Sharing and Reserve Substitutions of Operating Reserve Products

Conference ·
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Electricity market pricing and settlement are the key signals for real-time dispatch and long-term investment decisions. Regional transmission operators (RTOs) in the U.S. adopt uniform pricing scheme, which is based on the marginal costs of supplying an incremental MW of electric services. The marginal cost of an electric service is highly dependent on the constraints in the pricing models of RTOs. A slight difference in constraint modeling of pricing model on energy and ancillary services could result in drastically different market clearing prices (MCPs), cleared reserve quantities, and associated revenue. RTOs in the U.S. have various market designs and assumptions in ancillary services modeling in capacity sharing and reserve substitutes. This paper examines four combination models of capacity sharing and reserve substitutes and analyzes the associated market implications. The numerical results present that 1) cascading reserve requirements have direct impact on reserve pricing schemes 2) both cascading reserve requirements and sharing capacity have significant impact on reserve MCPs and locational marginal prices, and thus result in drastically different reserve revenue, energy revenue, generation cost, and generation profit.

Research Organization:
National Renewable Energy Laboratory (NREL), Golden, CO (United States)
Sponsoring Organization:
USDOE National Renewable Energy Laboratory (NREL)
DOE Contract Number:
AC36-08GO28308
OSTI ID:
2281822
Report Number(s):
NREL/CP-6A40-88576; MainId:89355; UUID:a7d0c5b2-f4e8-4a0c-8075-1e71122aa213; MainAdminID:71574
Resource Relation:
Conference: Presented at the North American Power Symposium, 15-17 November 2023, Asheville, North Carolina
Country of Publication:
United States
Language:
English

References (11)

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Constrained economic dispatch following generation outage for hot spinning reserve allocation using hybrid grey wolf optimizer January 2023
Scheduling and Pricing of Coupled Energy and Primary, Secondary, and Tertiary Reserves November 2005
Energy and reserve market designs with explicit consideration to lost opportunity costs February 2003
On Secured Spinning Reserve Deployment of Energy-Limited Resources Against Contingencies January 2022
Multi-Area Reserve Dimensioning Using Chance-Constrained Optimization September 2022
Addressing Uncertainties Through Improved Reserve Product Design January 2022
Contingency-Based Zonal Reserve Modeling and Pricing in a Co-Optimized Energy and Reserve Market May 2008
Energy and Reserve Pricing in Security and Network-Constrained Electricity Markets May 2005
Market Implications of Short-Term Reserve Deliverability Enhancement March 2021
Incorporating Post Zonal Reserve Deployment Transmission Constraints Into Energy and Ancillary Service Co-Optimization March 2014

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Related Subjects

ENERGY PLANNING, POLICY, AND ECONOMY
ancillary services
capacity sharing
market clearing
market settlements
pricing schemes
reserve market
reserve requirements