A Real Options Market-Based Approach to Increase Penetration of Renewables

Aguiar, Nayara; Gupta, Vijay; Khargonekar, Pramod P.

doi:10.1109/tsg.2019.2942258

Cited by 13 publications

(11 citation statements)

References 23 publications

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“…Examples of such contracts would be where renewable power producers bid in the day ahead market but also buy options from natural gas producers (reliable sources) to hedge their risks in case of lower than anticipated production. 38 , 39 The forward contract example in our study is essentially a pre-bid power delivery promise (corresponding to the threshold) and the energy droughts are the periods where the producer will not be able to meet their obligations.…”

Section: Resultsmentioning

confidence: 99%

A k-nearest neighbor space-time simulator with applications to large-scale wind and solar power modeling

2022

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Section: Resultsmentioning

confidence: 99%

A k-nearest neighbor space-time simulator with applications to large-scale wind and solar power modeling

2022

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“…Readers familiar with transmission-level energy markets will recognize rental markets as a form of forward markets. Indeed, one may also use a form of forward energy market similar to the design of day-ahead markets in current transmission-level energy markets [3]. A key difference, however, is that, in traditional day-ahead markets, due to their uncertainty in generation, solar producers has to bid more conservatively to avoid the penalty of under-generation.…”

Section: Solar-panel Rental Marketsmentioning

confidence: 99%

“…The market collects the bids from all firms, as well as the panel demand functions 𝑑 𝑛 (𝜋) from all consumers. 3 The market then stacks all the sub-bids together to compute the supply curve (similar to real-time markets in Section 4) for the total available solar-panel size at each price point. Similarly, the demand function 𝑑 𝑛 (𝜋) is added together to form the total demand curve 𝐷 (𝜋).…”

Section: Mechanism Of Rental Marketsmentioning

confidence: 99%

Distribution-level markets under high renewable energy penetration

Lin

Huang

2022

Proceedings of the Thirteenth ACM International Conference on Future Energy Systems

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We study the market structure for emerging distribution-level energy markets with high renewable energy penetration. Renewable generation is known to be uncertain and has a close-to-zero marginal cost. In this paper, we use solar energy as an example of such zero-marginal-cost resources for our focused study. We first show that, under high penetration of solar generation, the classical real-time market mechanism can either exhibit significant price-volatility (when each firm is not allowed to vary the supply quantity), or induce price-fixing (when each firm is allowed to vary the supply quantity), the latter of which leads to extreme unfairness of surplus division. To overcome these issues, we propose a new rental-market mechanism that trades the usage-right of solar panels instead of real-time solar energy. We show that the rental market produces a stable and unique price (therefore eliminating price-volatility), maintains positive surplus for both consumers and firms (therefore eliminating price-fixing), and achieves the same social welfare as the traditional real-time market. A key insight is that rental markets turn uncertainty of renewable generation from a detrimental factor (that leads to price-volatility in real-time markets) to a beneficial factor (that increases demand elasticity and contributes to the desirable rental-market outcomes). CCS CONCEPTS• Hardware → Smart grid.

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“…The setting up of reliability contracts between conventional generators and VRE generators to avoid unexpected energy deficits due to variability in generation is proposed in [70,71]. In the proposed work, wind generators are penalized for not meeting their obligations for providing power as per their estimated offer in a day-ahead electricity market.…”

Section: Challenges In Electricity Markets and Their Proposed Solutionsmentioning

confidence: 99%

“…-A real options market-based approach is in [70]. -Variable generators purchase options for reserve from flexible generators in an ex-ante options market.…”

Section: Peculiarities Of the Studied Models Main Highlights Recommendations For Future Workmentioning

confidence: 99%

Analyzing Electricity Markets with Increasing Penetration of Large-Scale Renewable Power Generation

et al. 2021

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Global electricity markets are undergoing a rapid transformation in their energy mix to meet commitments towards sustainable electric grids. This change in energy mix engenders significant challenges, specifically concerning the management of non-dispatchable energy resources. System and market operators are required to meet power system security and reliability requirements whilst providing electricity at competitive prices. An overview of electricity markets is provided in this paper with a critical appraisal of each market’s ability to manage the large-scale energy mix transition. This paper provides a commentary on the distinct features of electricity market models implemented around the world and highlights the barriers within these market models that are hindering the energy mix transition. Various researchers and policymakers are proposing solutions and market reforms for the smooth transitioning of the energy mix. This paper presents a systematic review of the proposed solutions in the literature and critiques the effectiveness and ease of implementation of the reviewed solutions. Research gaps and future research directions are indicated to promote further exploration towards the effective integration of large-scale renewable energy technologies.

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A Real Options Market-Based Approach to Increase Penetration of Renewables

Cited by 13 publications

References 23 publications

A k-nearest neighbor space-time simulator with applications to large-scale wind and solar power modeling

A k-nearest neighbor space-time simulator with applications to large-scale wind and solar power modeling

Distribution-level markets under high renewable energy penetration

Analyzing Electricity Markets with Increasing Penetration of Large-Scale Renewable Power Generation

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