Intraday markets, wind integration and uplift payments in a regional U.S. power system

Cody Hohl, Chiara Lo Prete, Ashish Radhakrishnan and Mort Webster

Energy Policy, 2023, vol. 175, issue C

Abstract: U.S. electricity markets adopt a two-settlement structure with day-ahead and real-time markets. Wind power integration poses a challenge for this market structure because day-ahead wind production forecasts are uncertain and significant rescheduling costs may occur in real time, increasing the need for out-of-market uplift payments. We investigate whether a multi-settlement structure with four intraday stages taking place 18 to 3 h before electricity generation reduces uplift payments and system costs, relative to a two-settlement structure. We develop unit commitment and dispatch models that account for intertemporal constraints and solve them on a 36-node test system using historical wind forecasts provided by a Regional Transmission Organization, as well as synthetic wind forecasts reproducing the observed correlation in the historical data. Combining historical and simulated forecasts allows us to account for wind uncertainty and draw more robust conclusions about the relative merits of each market structure. Finally, we compare the performance of market designs under varying levels of wind penetration. Under any level of wind penetration, the proposed multi-settlement market design is more likely to yield higher uplift than the two-settlement market design. Wind forecast accuracy and structural differences between the U.S. and European electricity markets are key drivers of our results.

Keywords: Electricity market design; Intraday; Wind energy; Uplift (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:175:y:2023:i:c:s0301421523000885

DOI: 10.1016/j.enpol.2023.113503

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