Redesigning capacity market to include flexibility via ramp constraints in high-renewable penetrated system

Fang, Xiuzhong; Hu, Qinran; Bo, Rui; Li, Fangxing

doi:10.1016/j.ijepes.2020.106677

Cited by 17 publications

(8 citation statements)

References 27 publications

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“…As seen in Table 5, in both EbM and PbM, the revenue of inflexible unit is higher, and this is a real flexibility issue that is probable in electricity markets as reported in References 35,36. According to what is observed here, pure PbM structure is not sufficient to overcome the flexibility challenge and needs further supports, such as incorporating energy storage systems 37 and/or ramp market, 38,39 flexible demand response programs, 40 differentiating flexibility feature within the capacity market, 41 or incorporating decomposed dual variables in the billing procedures 36 . Still, the above results show that from the flexibility point of view, pure PbM structure outperforms pure EbM.…”

Section: Study #3: Flexibility Advantage In Ebm and Pbmmentioning

confidence: 62%

Investigation of power‐based day‐ahead electricity market in terms of inducing fake ramp demand, assuring real‐time compatibility, support for flexibility, and providing some solutions

Rahmati

Foroud

2021

Int Trans Electr Energ Syst

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The conventional design of electricity markets is based on energy (energy‐based model or EbM). EbM includes some formerly assumed minor flaws that lead to a mismatch between the day‐ahead schedules and real‐time operation. Since these flaws are within the EbM's nature, even without any kind of forecast error, the EbM generation schedule may be unrealizable in real‐time operation. An alternative design based on power (power‐based model or PbM) has been introduced in the previous studies for better real‐time compatibility. Some uninvestigated aspects of this new model are addressed in this paper to shed more light on its pros and cons: (a) Formation of fake demand for extra ramp is likely in PbM. This phenomenon, which is overlooked in previous studies, can endanger system integrity and market performance. This weakness is explained here, and a solution is proposed. (b) Increasing time granularity is known effective for reflecting real‐time condition in the day‐ahead market. We doubled the time resolution of EbM and compared its schedules with PbM's schedules from the viewpoint of real‐time compatibility. (c) Flexibility is a serious issue in the power system. As a new design for market, knowing PbM's impact on this matter is crucial, which is missing in the literature. To fill the gap, PbM's impact on the economic position of flexible units is analyzed here. This paper has a practical perspective, and the input data of the test system are based on the Iranian power grid. The input parameters are scaled down to fit the IEEE 24‐Bus test system.

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Section: Study #3: Flexibility Advantage In Ebm and Pbmmentioning

confidence: 62%

Investigation of power‐based day‐ahead electricity market in terms of inducing fake ramp demand, assuring real‐time compatibility, support for flexibility, and providing some solutions

Rahmati

Foroud

2021

Int Trans Electr Energ Syst

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“…Since there are many power plants and CHPs in the power system, their exclusion from the capacity auctions may cause an impulse for investing in new, low-emission power generation units. However, it is crucial to consider the current design of the Polish capacity market to avoid problems with different flexibility of power units [26].…”

Section: Discussionmentioning

confidence: 99%

“…Fang et al (2021) pointed out the current design of the capacity markets does not consider the difference in the flexibility of power units. The authors propose the new framework of capacity remuneration mechanism that would differentiate the characteristic of units and provide better incentives for peak load generation capacity [26]. Schäfer and Altvater (2021) also indicate that the capacity market does not provide the same chances for each power unit.…”

Section: Literature Reviewmentioning

confidence: 99%

Capacity Market and (the Lack of) New Investments: Evidence from Poland

et al. 2021

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Capacity remuneration mechanisms operate in many European countries. In 2018, Poland implemented a centralized capacity market to ensure appropriate funding for the existing and new power generation units to improve long-term energy security. One of the declarations made while the mechanism was deployed was its beneficial influence on incentives for investments in new units. In this context, this paper aims to analyze the effects of the capacity mechanism adopted for investments in new power generation units that may be financed under the capacity market mechanism in Poland. The analysis is conducted for four types of capacity market units, the existing, refurbishing, planned, and demand-side response types, and includes the final results of capacity auctions. The results prove that the primary beneficiaries of the capacity market in Poland have been the existing units (including the refurbishing ones) responsible for more than 80% of capacity obligation volumes contracted for 2021–2025. Moreover, during the implementation of the capacity market in Poland, the planned units that signed long-term capacity contracts with a total share of 12% of the whole market were already at the advanced phases of construction, and the investment decisions were made long before the implementation of the capacity market mechanism. Therefore, they were not associated with the financial support from the capacity market. The study indicates that the capacity market did not bring incentives for investments in new power generation units in the investigated period.

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“…After the grid connection of large scale renewable energy generation, relying solely on generation-side resources cannot fully meet the requirements of reliable, safe and efficient operation of the power system with renewable energy as the main form of power generation in the grid, and new available resources must be tapped from the customer side [21] . DR resources can induce dispatchable, temporary load reductions during system load peaks to ensure system capacity adequacy.…”

Section: B Impact On Generation Capacity Adequacy Under New-type Powe...mentioning

confidence: 99%

Experiences and Lessons Learned From DR Resources Participating in the US and UK Capacity Markets: Mechanisms, Status, Dilemmas and Recommendations

et al. 2022

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The role of demand response resources is particularly important under the new-type power system with new energy as the main source. Demand response resources are important for generation adequacy and can provide electricity capacity value for power system. The United States and the UK are the only countries in the world that offer capacity services from demand response resources as generation resources. Their experiences and lessons learned are of great significance to other countries and regions. This paper first analyzes the significance of DR resource participating in the capacity market from two perspectives: the development of demand response resources and system generation capacity. Secondly, a detailed analysis of the mechanism design of demand response resources in the US capacity market is presented and the development status of demand response resources since 2007 is provided, so as to provide meaningful reference for other countries and regions. Thirdly, this study introduces the current situation and dilemma of demand response resources in the capacity market of the UK, and provides corresponding suggestions so that demand response resources in other countries and regions can avoid repeating the pace of the UK in the capacity market. Finally, suggestions for demand response resources to participate in the capacity market are given from four aspects.INDEX TERMS Demand response; capacity market; market mechanism; status; dilemmas; recommendations.

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Redesigning capacity market to include flexibility via ramp constraints in high-renewable penetrated system

Cited by 17 publications

References 27 publications

Investigation of power‐based day‐ahead electricity market in terms of inducing fake ramp demand, assuring real‐time compatibility, support for flexibility, and providing some solutions

Investigation of power‐based day‐ahead electricity market in terms of inducing fake ramp demand, assuring real‐time compatibility, support for flexibility, and providing some solutions

Capacity Market and (the Lack of) New Investments: Evidence from Poland

Experiences and Lessons Learned From DR Resources Participating in the US and UK Capacity Markets: Mechanisms, Status, Dilemmas and Recommendations

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