Market Implications of Alternative Operating Reserve Modeling in Wholesale Electricity Markets

Journal Article · Fri Oct 25 00:00:00 EDT 2024 · IEEE Transactions on Energy Markets, Policy and Regulation

DOI:https://doi.org/10.1109/TEMPR.2024.3485948· OSTI ID:3015925

Davoudi, Hamid ^[1]; Wang, Fengyu ^[1]; Chen, Yonghong ^[2]; Shi, Di ^[1]; Xavier, Alinson ^[3]; Qiu, Feng ^[3]

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1. New Mexico State University
2. National Laboratory of the Rockies, Golden, CO (United States)
3. Argonne National Laboratory

Pricing and settlement mechanisms are crucial for efficient resource allocation, investment incentives, market competition, and regulatory oversight. In the United States, Regional Transmission Operators (RTOs) adopts a uniform pricing scheme that hinges on the marginal costs of supplying additional electricity. This study investigates the pricing and settlement impacts of alternative reserve constraint modeling, highlighting how even slight variations in the modeling of constraints can drastically alter market clearing prices, reserve quantities, and revenue outcomes. Focusing on the diverse market designs and assumptions in ancillary services by U.S. RTOs, particularly in relation to capacity sharing and reserve substitutions, the research examines four distinct models that combine these elements based on a large-scale synthetic power system test data. Our study provides a critical insight into the economic implications and the underlying factors of these alternative reserve constraints through market simulations and data analysis.

• Research Organization: National Laboratory of the Rockies (NLR), Golden, CO (United States)
• Sponsoring Organization: USDOE National Laboratory of the Rockies (NLR)
• DOE Contract Number: AC36-08GO28308
• OSTI ID: 3015925
• Report Number(s): NLR/JA-6A40-99065
• Journal Information: IEEE Transactions on Energy Markets, Policy and Regulation , Journal Name: IEEE Transactions on Energy Markets, Policy and Regulation Journal Issue: 1 Vol. 3
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
ancillary services
capacity sharing
market clearing
market settlements
pricing schemes
reserve market
reserve requirements