Incentivizing Flexibility in System Operations

Michael Milligan, Aaron Townsend, Erik Ela, Audun Botterud, Todd Levin, Aaron Bloom

Research output: Chapter in Book/Report/Conference proceedingChapter


Defining flexibility has been a challenge that a number of industry members and researchers have attempted to address in recent years. With increased variability and uncertainty of variable generation (VG), the resources on the system will have to be more flexible to adjust output, so that power output ranges, power ramp rates, and energy duration sustainability are sufficient to meet the needs of balancing supply with demand at various operational timescales. This chapter discusses whether existing market designs provide adequate incentives for resources to offer their flexibility into the market to meet the increased levels of variability and uncertainty introduced by VG in the short-term operational time frame. It presents a definition of flexibility and discusses how increased levels of VG require increased needs for flexibility on power systems. Following this introductory material, the chapter examines how existing market designs ensure that resources have the right incentives to provide increased flexibility, and then discusses a number of emerging market design elements that impact flexibility incentives.
Original languageAmerican English
Title of host publicationElectricity Markets with Increasing Levels of Renewable Generation: Structure, Operation, Agent-Based Simulation, and Emerging Designs
Subtitle of host publicationStudies in Systems, Decision and Control, Volume 144
EditorsF. Lopes, H. Coelho
StatePublished - 2018

NREL Publication Number

  • NREL/CH-5D00-71087


  • flexibility
  • grid resources
  • power systems
  • variable generation


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