The Use of Marginal Energy Costs in the Design of U.S. Capacity Markets

Moye, Robert; Meyn, Sean

doi:10.24251/hicss.2018.326

Cited by 7 publications

(2 citation statements)

References 26 publications

(23 reference statements)

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“…Electricity markets in the US (and most of the world) are operated as multi-settlement markets. A large fraction of electricity is traded in the organized markets [7]. These are run by an independent system operator (ISO) as multiple forward markets, and a real-time or spot market.…”

Section: Introductionmentioning

confidence: 99%

“…Electricity markets covering the majority of the US, and most of the industrialized world are operated as multi-settlement markets. These markets are organized in the sense that demand for and supply of energy and ancillary services are matched via a centralized auction mechanism, as opposed to bilateral negotiations over individual transactions [6], [9]. An independent system operator (ISO) runs a given market as a series of multi stage forward markets, and a real time or spot market.…”

Section: Introductionmentioning

confidence: 99%

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A Two-Stage Market Mechanism for Electricity with Renewable Generation

Dahlin

Jain

2019

2019 IEEE 58th Conference on Decision and Control (CDC)

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Over the last few decades, electricity markets around the world have adopted multi-settlement structures, allowing for balancing of supply and demand as more accurate forecast information becomes available. Given increasing uncertainty due to adoption of renewables, more recent market design work has focused on optimization of expectation of some quantity, e.g. social welfare.However, social planners and policy makers are often risk averse, so that such risk neutral formulations do not adequately reflect prevailing attitudes towards risk, nor explain the decisions that follow. Hence we incorporate the commonly used risk measure conditional value at risk (CVaR) into the central planning objective, and study how a two-stage market operates when the individual generators are risk neutral. Our primary result is to show existence (by construction) of a sequential competitive equilibrium (SCEq) in this risk-aware two-stage market. Given equilibrium prices, we design a market mechanism which achieves social cost minimization assuming that agents are non strategic. I. INTRODUCTIONElectricity markets covering the majority of the US, and most of the industrialized world are operated as multi-settlement markets. These markets are organized in the sense that demand for and supply of energy and ancillary services are matched via a centralized auction mechanism, as opposed to bilateral negotiations over individual transactions [6], [9]. An independent system operator (ISO) runs a given market as a series of multi stage forward markets, and a real time or spot market. Depending upon the region, forward markets are settled days or hours ahead of the intended time of delivery, allowing for provision of cheaper, but relatively inflexible generation. Spot markets open and are settled minutes before delivery in order to balance supply and demand in real time.While the clearing mechanisms in electricity markets are designed with the objective of maximizing welfare of both producers and consumers, the imperative to increase penetration of renewables and reduce reliance on fossil fuels now strains the existing multi-settlement paradigm. In the past, the primary source of uncertainty in market clearing came from demand side deviations, and such errors reduced to under 5% by the opening of spot markets [7]. Current levels of renewable adoption have already exacerbated typical levels of uncertainty for net demand (demand minus renewable generation), and under official mandates to increase the proportion of energy sourced from renewables this trend will only continue. For example, in California renewables constitute nearly 34% of total retail sales, while a recently passed state bill legislates that 100% of power come from renewables by 2045 [2], [5]. Reliance on renewables to this degree introduces an order of magnitude greater uncertainty in net demand, and necessitates novel market designs to address this challenge.As a starting point, given that economic dispatch is a multi-settlement process, it makes sense to couple markets across fo...

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%