An empirical analysis of supply offers in the ERCOT operating reserves markets

Noll, Mark D.; Mann, W. Neal; Levin, Todd

doi:10.1016/j.apenergy.2024.125035

An empirical analysis of supply offers in the ERCOT operating reserves markets

Journal Article · Sat Dec 14 00:00:00 EST 2024 · Applied Energy

DOI:https://doi.org/10.1016/j.apenergy.2024.125035· OSTI ID:2545074

Noll, Mark D. ^[1]; Mann, W. Neal ^[2]; Levin, Todd ^[2]

Northwestern University, Evanston, IL (United States); Argonne National Laboratory (ANL), Argonne, IL (United States)
Argonne National Laboratory (ANL), Argonne, IL (United States)

Here, this paper seeks to improve theoretical and empirical understanding of supplier dynamics in wholesale markets for operating reserves, which have been understudied compared to energy markets. We begin by identifying several economic factors that unit owners may consider when submitting offers into operating reserves auctions in two-stage, co-optimized markets common across much of North America. Next, we analyze historical offer data from the Electric Reliability Council of Texas (ERCOT) market to assess whether actual reserve market behavior aligns with expectations based on economic theory, as well as with commonly used assumptions in electricity market modeling efforts. We find that the aggregate supply of operating reserves in ERCOT varies meaningfully over time, becoming more expensive during summer afternoons, which is consistent with theoretical expectations but contradicts the typical modeling assumption of temporally invariant reserve offers. Analysis of offers made by individual units uncovers additional insights, such as the existence of large offer pattern differences by unit owner and the tendency of battery storage units to submit very low offer prices. We conclude by discussing how our findings can be integrated into electricity market modeling assumptions to improve alignment with observed operating reserve offer inputs and pricing outcomes.

View Accepted Manuscript (DOE)

Research Organization:: Argonne National Laboratory (ANL), Argonne, IL (United States)

Sponsoring Organization:: USDOE Office of Electricity (OE); USDOE Office of Energy Efficiency and Renewable Energy (EERE), Renewable Power Office. Wind Energy Technologies Office; USDOE Office of Nuclear Energy (NE); USDOE Office of Science (SC)

Grant/Contract Number:: AC02-06CH11357

OSTI ID:: 2545074

Alternate ID(s):: OSTI ID: 2545067

Journal Information:: Applied Energy, Journal Name: Applied Energy Vol. 381; ISSN 0306-2619

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

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An empirical analysis of supply offers in the ERCOT operating reserves markets

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