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Paying for load reductions results in a market, where the amount of resources sold is less than the amount of resources bought. To resolve this imbalance, ISOs must allocate the cost of compensating demand response to those who benefit from reduced LMPs. Current cost allocation methods are based on each energy buyer's load share. In an uncongested network, this results in a “fair” allocation of costs,...
The provision of ancillary services in case of realtime imbalances is an essential part of secure power system operation. Demand side participation via direct load control is a new flexible source for reliable provision of ancillary services and supports the large scale integration of fluctuating renewable energy in-feed. However, rewarding contracts have to be designed such that the consumers have...
Electricity market designs have to cope with a growing share of renewable energy sources. Payments to the generators have to ensure not only revenue adequacy but also incentivize the provision of an optimal amount of flexibility. This paper investigates the effects on global welfare of the introduction of (a) inexpensive storage and (b) a rolling horizon market design that supports the use of updated...
Demand side and energy storage participation can increase the liquidity of ancillary service markets and can have advantages such as faster response than conventional units when they paricipate in the automatic generation control (AGC). Unfortunately, demand and storage units have operational constraints comprising power, energy and on/off duty-cycles. One solution to overcome these limitations is...
Market designs for reserve capacity in power systems face new challenges in terms of demand side participation (DSP) and renewable energy in-feed. In order to enhance power system flexibility and to reduce the amounts required of reserve capacity two key issues have to be tackled: First, financial incentives for DSP to participate in Ancillary Service markets. Second, incentives for intermittent sources...
The shift in the electricity industry from regulated monopolies to competitive markets as well as the widespread introduction of fluctuating renewable energy sources bring new challenges to power systems. Some of these challenges can be mitigated by using demand response (DR) and energy storage to provide power system services. The aim of this paper is to provide a unified framework that allows us...
Operating reserves are generally priced without explicit consideration of the value of reliable power supply to the individual consumer. Though economic theory suggests the allocation of services according to its individual valuation, missing netting of imbalances or strategic behavior of market participants make the implementation of decentralized pricing schemes for reserve capacity is advantageous...
We introduce a novel contract design framework that enables demand side resources to participate in ancillary services markets in a cost efficient manner. Resources enter contracts with aggregators (which may be utilities) to provide capacity, which is directly controlled by the aggregator via a control signal. The contracting process allows consumers to make choices based upon their own cost/benefit...
There exists disagreement on how Demand Response (DR) programs should be designed. This is likely because people from different fields view DR differently. For example, some see DR as a mechanism to improve the economic efficiency of electricity markets while others see it as a new control variable that can enhance power system reliability and security. In this paper, we review the many options for...
In this paper we assess the influence of different imbalance settlement systems on the strategic behavior of Balance Responsible Units. We therefore apply a continuous action agent-based approach in a representative test-system. The investigation points to the effects of one-/two price settlement systems as well as to the impacts of different capacity remuneration schemes. Further, we take transmission...
In this paper we make use of an agent-based approach to model strategic behavior of supply units in an simultaneous clearing of spot energy and operating reserve power/energy. Generation units submit bids for energy and reserve power capacity as well as reserve energy. The test system shows the incidence of capacity limits as well as remote renewable energy penetration. The contributions of this paper...
In this paper we assess the incidence of strategic behavior of demand and supply units in market set ups which should enable the efficient in-feed of renewable energy sources. Therefore, a sequence of energy and reserve power auctions is modeled in an agent-based framework in order to approximately come up with the drawbacks of the different market designs. The main focus lies on the reserve power...
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