Characteristics of locational uncertainty marginal price for correlated uncertainties of variable renewable generation and demands

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

Applied Energy, 2021, vol. 282, issue PA, No S0306261920314951

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.

Keywords: Locational marginal price; Uncertainty pricing; Cost recovery; Revenue adequacy; Market equilibrium (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306261920314951
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:282:y:2021:i:pa:s0306261920314951

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

DOI: 10.1016/j.apenergy.2020.116064

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().