Large-scale integration of renewable energy sources (RES) brings huge challenges to the power system. A cost-effective reserve deployment and uncertainty pricing mechanism are critical to deal with the uncertainty and variability of RES. To this end, this paper proposes a novel locational marginal pricing mechanism in day-ahead market for managing uncertainties from RES. Firstly, an improved multi-ellipsoidal uncertainty set (IMEUS) considering the temporal correlation and conditional correlation of wind power forecast is formulated to better capture the uncertainty of wind power. The dimension of each ellipsoidal subset is optimized based on a comprehensive evaluation index to reduce the invalid region without large loss of modeling accuracy, so as to reduce the conservatism. Then, an IMEUS-based robust unit commitment (RUC) model and a robust economic dispatch (RED) model are established for the day-ahead market clearing. Both the reserve cost and ramping constraints are considered in the overall dispatch process. Furthermore, based on the Langrangian function of the RED model, a new locational marginal pricing mechanism is developed. The uncertainty locational marginal price (ULMP) is introduced to charge the RES for its uncertainties and reward the generators who provide reserve to mitigate uncertainties. The new pricing mechanism can provide effective price signals to incentivize the uncertainty management in the day-ahead market. Finally, the effectiveness of the proposed methods is verified via numerous simulations on the PJM 5-bus system and IEEE 118-bus system.
Electric power generation, transmission, and distribution systems are attracting a large amount of interest from researchers with the development of the smart grid technologies. A smart grid aims at effective control and conditioning of the distribution of electricity. Pricing signal based distribution system are seen as one of the novel ways to achieve control in a smart grid. In our work, we propose to use a pricing signal modeled after the locational marginal price in the transmission system to locally provide price data to the users. The formulation and implementation of the distributional…
An effective distribution electricity market (DEM) is required to manage the rapidly growing small-scale distributed energy resources (DERs) in distribution systems (DSs). This paper proposes a day-ahead DEM clearing and pricing mechanism to account for the uncertainty of DERs and the coordination with the wholesale electricity market (WEM) through a bi-level model. The upper-level model clears the WEM in the transmission system (TS) and forms the locational marginal price (LMP) and uncertainty LMP (ULMP) for energy and uncertainty/reserve, respectively. In the lower level, a robust scheduling…
Pricing multi-interval economic dispatch of electric power under operational uncertainty is considered in this two-part paper. Part I investigates dispatch-following incentives for generators under the locational marginal pricing (LMP) and temporal locational marginal pricing (TLMP) policies. Extending the theoretical results developed in Part I, Part II evaluates a broader set of performance measures under a general network model. For networks with power flow constraints, TLMP is shown to have an energy-congestion-ramping price decomposition. Under the one-shot dispatch and pricing model, thi…
Pricing multi-interval economic dispatch of electric power under operational uncertainty is considered in this two-part paper. Part I investigates dispatch-following incentives of profit-maximizing generators and shows that, under mild conditions, no uniform-pricing scheme for the rolling-window economic dispatch provides dispatch-following incentives that avoid discriminative out-of-the-market uplifts. A nonuniform pricing mechanism, referred to as the temporal locational marginal pricing (TLMP), is proposed. As an extension of the standard locational marginal pricing (LMP), TLMP takes into a…
We propose a scenario-oriented approach for energy-reserve joint procurement and pricing for electricity market. In this model, without the empirical reserve requirements, reserve is procured according to all possible contingencies and load/renewable generation fluctuations with the minimum expected system total cost. The innovative locational marginal pricing approach for loads, generations and reserve and the associated settlement process are proposed. We show that payments from loads, payments to generators and congestion rent will reach their balance in the basecase as well as in all scena…
The problem of pricing utility-scale energy storage resources (ESRs) in the real-time electricity market is considered. Under a rolling-window dispatch model where the operator centrally dispatches generation and consumption under forecasting uncertainty, it is shown that almost all uniform pricing schemes, including the standard locational marginal pricing (LMP), result in lost opportunity costs that require out-of-the-market settlements. It is also shown that such settlements give rise to disincentives for generating firms and storage participants to bid truthfully, even when these market pa…
We consider some crucial problems related to the secure and reliable operation of power systems with high renewable penetrations: how much reserve should we procure, how should reserve resources distribute among different locations, and how should we price reserve and charge uncertainty sources. These issues have so far been largely addressed empirically. In this paper, we first develop a scenario-oriented energy-reserve co-optimization model, which directly connects reserve procurement with possible outages and load/renewable power fluctuations without the need for empirical reserve requireme…
We analyze pricing mechanisms in electricity markets with AC power flow equations that define a nonconvex feasible set for the economic dispatch problem. Specifically, we consider two possible pricing schemes. The first among these prices are derived from Lagrange multipliers that satisfy Karush-Kuhn-Tucker conditions for local optimality of the nonconvex market clearing problem. The second is derived from optimal dual multipliers of the convex semidefinite programming (SDP) based relaxation of the market clearing problem. Relationships between these prices, their revenue adequacy and market e…
The implementation of electricity markets based on locational marginal pricing in a multi-settlement process has allowed wholesale competition, with pricing mechanisms that incentivize the optimal allocation of generation, transmission, and demand-response resources. While efficiency and reliability gains have been achieved in the US at a regional level, the lack of adequate inter-regional coordination mechanisms has limited broader gains. The shortcomings of cross-border coordination of electricity markets become more apparent as the industry transitions towards higher penetration of renewabl…
The burgeoning integration of distributed energy resources (DER) poses new challenges for the economic and safe operation of the electricity system. The current distribution-side policy is largely based on mandatory regulations and incentives, rather than the design of a competitive market mechanism to arouse DERs to freely compete in the retail market. To address this issue, we proposed a transactive retail market mechanism to attract the active participation of profit-driven DER retailers in a deregulated way. Considering the limited competitive property of the retail market, a bi-level DSO-…
