Texas's operating reserve demand curve's generation investment incentive

Does locational marginal pricing impact generation investment location decisions? An analysis of Texas’s wholesale electricity market

“…While the LMPs calculated every 5 minutes (or less) are used to compensate generators, time-and load-weighted 15-minute zonal prices are used to settle the demand side of the market. 3 Although an operating reserve demand curve (ORDC) has been introduced to raise prices across the market equally when operating reserves approach low levels, the ORDC adder had a very limited impact on LMPs during the period of our study (Zarnikau et al, 2019a).…”

“…where is the plant's capacity cost (Zarnikau et al, 2019a). An IPP selects node * when Δ * = max (Δ 1 , Δ 2 , … , Δ ).…”

Calibration of Operating Reserve Demand Curves Using a System Operation Simulator

“…The calibration of ORDCs has largely been restricted to open-loop analyses in the existing literature [11], [14], [15]. An open-loop analysis is defined by its lack of feedback from the introduction of elastic ORDCs.…”

“…The scarcity prices are derived from the remaining reserve capacity of a unit commitment model that uses fixed reserve requirements. Zarnikau et al [14] analyses the impact of scaling ORDCs horizontally, as well as the effect of the ORDC on the real-time market price and investment incentives for natural-gas-fired generation in the Texas electricity market.…”

“…References [11], [14] highlight the influence of the shape of ORDC on the price and how the parametrization of the ORDC can affect the remuneration of different technologies through its effect on prices. Nevertheless, the open-loop approach proposed in those papers is not able to capture the dispatch and commitment incentives created by different calibrations of the ORDC.…”