Characteristics of Locational Uncertainty Marginal Price for Correlated Uncertainties of Variable Renewable Generation and Demands: Article No. 116064

Xin Fang, Hantao Cui, Ershun Du, Fangxing Li, Chongqing Kang

Research output: Contribution to journalArticlepeer-review

18 Scopus Citations

Abstract

With the rapid increase of variable renewable energy sources in power systems, how to manage and price the uncertainty of renewable resources’ power outputs is becoming an urgent issue. Current market designs considering the uncertainties are mainly based on the probabilistic scenario set of demand and renewable energy resources power outputs. This consideration makes market designs vulnerable to three significant challenges when put into practice. First, the accurate probability distribution of renewable generation is hard to obtain in real-time. Second, it is challenging to clear the market timely with many scenarios to guarantee accuracy. Third, generation cost recovery cannot be guaranteed for some scenarios. To overcome these challenges, this paper proposes a locational uncertainty marginal price model to price the uncertainty explicitly based on a scenario-free stochastic market-clearing model. Instead of using the probabilistic scenario set, the uncertainty of renewable energy sources and loads is modeled with distributionally-robust chance constraints. The correlation of uncertainties can be endogenously modeled in both the market-clearing and the locational uncertainty marginal price formation. Furthermore, this paper proves that generation cost recovery, revenue adequacy, and partial market equilibrium can be achieved using the locational uncertainty marginal price model. Numerical results from both the small and large systems simulations validate that the generation cost recovery is maintained no matter the generation participates in uncertainty mitigation or not. The transmission congestion surplus is also allocated appropriately among loads, renewable energy sources, and financial transmission right owners.
Original languageAmerican English
Number of pages12
JournalApplied Energy
Volume282
Issue numberPart A
DOIs
StatePublished - 2021

NREL Publication Number

  • NREL/JA-5D00-78580

Keywords

  • cost recovery
  • locational marginal price
  • market equilibrium
  • revenue adequacy
  • uncertainty pricing

Fingerprint

Dive into the research topics of 'Characteristics of Locational Uncertainty Marginal Price for Correlated Uncertainties of Variable Renewable Generation and Demands: Article No. 116064'. Together they form a unique fingerprint.

Cite this