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A Coordination Mechanism For Reducing Price Spikes in Distribution Grids

Shantanu Chakraborty (), Remco Verzijlbergh (), Kyri Baker (), Milos Cvetkovic (), Laurens De Vries () and Zofia Lukszo ()
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Shantanu Chakraborty: Faculty of Technology, Policy and Management, Delft University of Technology, 2628BX Delft, The Netherlands
Remco Verzijlbergh: Faculty of Technology, Policy and Management, Delft University of Technology, 2628BX Delft, The Netherlands
Kyri Baker: Civil, Environmental and Architectural Engineering, University of Colorado at Boulder, CO 80309, USA
Milos Cvetkovic: Faculty of Electrical Engineering, Mathematics and Computer Science, Delft University of Technology, 2628XE Delft, The Netherlands
Laurens De Vries: Faculty of Technology, Policy and Management, Delft University of Technology, 2628BX Delft, The Netherlands
Zofia Lukszo: Faculty of Technology, Policy and Management, Delft University of Technology, 2628BX Delft, The Netherlands

Energies, 2020, vol. 13, issue 10, 1-1

Abstract: Recently, given the increased integration of renewables and growing uncertainty in demand, the wholesale market price has become highly volatile. Energy communities connected to the main electricity grid may be exposed to this increasing price volatility. Additionally, they may also be exposed to local network congestions, resulting in price spikes. Motivated by this problem, in this paper, we present a coordination mechanism between entities at the distribution grid to reduce price volatility. The mechanism relies on the concept of duality theory in mathematical programming through which explicit constraints can be imposed on the local electricity price. Constraining the dual variable related to price enables the quantification of the demand-side flexibility required to guarantee a certain price limit. We illustrate our approach with a case study of a congested distribution grid and an energy storage system as the source of the required demand-side flexibility. Through detailed simulations, we determine the optimal size and operation of the storage system required to constrain prices. An economic evaluation of the case study shows that the business case for providing the contracted flexibility with the storage system depends strongly on the chosen price limit.

Keywords: demand-side flexibility; duality theory; price volatility; distribution grid (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
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