Managing Wind Power Uncertainty Through Strategic Reserve Purchasing

Benjamin Kroposki, Ershun Du, Ning Zhang, Chongqing Kang, Jianhua Bai, Miao Miao, Qing Xia

Research output: Contribution to journalArticlepeer-review

56 Scopus Citations

Abstract

With the rapidly increasing penetration of wind power, wind producers are becoming increasingly responsible for the deviation of the wind power output from the forecast. Such uncertainty results in revenue losses to the wind power producers (WPPs) due to penalties in ex-post imbalance settlements. This paper explores the opportunities available for WPPs if they can purchase or schedule some reserves to offset part of their deviation rather than being fully penalized in the real-time market. The revenue for WPPs under such mechanism is modeled. The optimal strategy for managing the uncertainty of wind power by purchasing reserves to maximize the WPP's revenue is analytically derived with rigorous optimality conditions. The amount of energy and reserves that should be bid in the market is explicitly quantified by the probabilistic forecast and the prices of the energy and reserves. A case study using the price data from ERCOT and wind power data from NREL is performed to verify the effectiveness of the derived optimal bidding strategy and the benefits of reserve purchasing. Additionally, the proposed bidding strategy can also reduce the risk of variations on WPP's revenue.

Original languageAmerican English
Article number7592460
Pages (from-to)2547-2559
Number of pages13
JournalIEEE Transactions on Power Systems
Volume32
Issue number4
DOIs
StatePublished - Jul 2017

Bibliographical note

Publisher Copyright:
© 1969-2012 IEEE.

NREL Publication Number

  • NREL/JA-5D00-66672

Keywords

  • Optimal bidding
  • probabilistic forecast
  • reserve
  • uncertainty
  • wind power

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