Pricing Energy in the Presence of Renewables

Abstract

At present, electricity markets largely ignore the fact that renewable power producers impose significant externalities on non-renewable energy producers. This is because consumers are generally guaranteed electricity within certain load parameters. The intermittent nature of production by renewable energy producers implies that they rely on non-renewable producers so that the aggregate power delivered meets the promised quality of service. This implicit insurance provided by the non-renewable power sector to consumers is not currently priced and leads to an often ignored, hidden monetary transfer from non-renewable producers to renewable producers. As the fraction of energy supplied by renewable resources increases, these externalities also increase. In this paper, we quantify these externalities by developing the market clearing price of energy in the presence of renewable energy. We consider a day-ahead electricity market where renewable and non-renewable generators bid by proposing their asking price per unit of energy to an independent system operator (ISO). The ISO's problem is a multi-stage stochastic optimization problem to dispatch energy from each generator to minimize the cost of purchased energy on behalf of the consumers. We incorporate the notion of load variance using the Conditional Value-at-Risk (CVAR) measure in the day-ahead electricity market to ensure that the generators are able to meet the load within a desired confidence level. We analytically derive the market clearing price of energy as a function of CVAR. It is shown that a higher penetration level of the renewable energies may increase the market clearing price of energy.

Non-cooperative game-theoretic model of demand response aggregator competition for selling stored energy in storage devices

“…A Bayesian game model analyzing cross-border transfer of electric power was presented in [11] to explain cross-border transfer within a market containing players controlling unreliable marginal generators. A dynamic game-theoretic model was developed in [12] to analyze the impacts of natural gas market reformation in promoting Natural Gas-Fired Electricity (NGFE) generation, in which hourly Real-Time Pricing (RTP) was applied in both natural gas and electricity markets [53]. An innovative game theoretic framework was proposed in [13] for a next-generation retail electricity market ("Energy Internet'') with high penetration of distributed residential electricity suppliers (''Energy Cells'').…”

Reliability and Market Price of Energy in the Presence of Intermittent and Non-Dispatchable Renewable Energies

“…Email: (azeinalz,dghavide,vgupta2)@nd.edu. A preliminary version of these results were accepted at American Control Conference, 2018 [1]. penetration of renewable energy not only decreases the revenue of the non-renewables but also can increase the maintenance and operating cost of the non-renewable generators in a long time-horizon.…”

Impact of grid impedance variations on harmonic emission of grid-connected inverters

“…Rapid growth in penetration of renewable energy sources into power system by further installation of them or replacement of existing conventional power plants, gradually weakens dominancy of synchronous machines compared to the power electronic based energy sources [6]. The built-in inverter of aforementioned non synchronous generations, significantly affects reliability and security margin of operation and control of power system [7][8][9][10].…”