Estimating the Operating Reserve Demand Curve for Efficient Adoption of Renewable Sources in Korea

Wooyoung Jeon and Jungyoun Mo ()
Additional contact information
Wooyoung Jeon: Department of Economics, Chonnam National University, Gwangju 61186, Republic of Korea
Jungyoun Mo: Department of Economics, Chosun University, Gwangju 61452, Republic of Korea

Energies, 2023, vol. 16, issue 3, 1-12

Abstract: As the proportions of variable renewable sources (VRSs) such as solar and wind energy increase rapidly in the power system, their uncertainties inevitably undermine power supply reliability and increase the amount of operating reserve resources required to manage the system. However, because operating reserves have the characteristics of a public good and their value is related to the social cost of blackouts, it is difficult to determine their market price efficiently, which leads to inefficiencies in procuring operating reserves. This study estimates the operating reserve demand curve (ORDC) of the Korean power system to provide an effective basis for measuring the proper value and quantity of operating reserves needed to meet the reliability standard. A stochastic dynamic optimization model is applied to incorporate the probabilistic characteristics of VRS and the inter-hour constraint, which is necessary for analyzing load-following reserves. An econometric model and the Monte Carlo simulation method are used to generate the forecast profiles of solar and wind generation. The results indicate that the proper amount of hourly operating reserves needed in 2034 is approximately 4.4 times higher than that in 2020 at the current reserve offer price. The ORDC of 2020 has a price-inelastic shape, whereas the ORDC of 2034 has a price-elastic shape because the reserve requirement varies considerably with its offer price level in the high-VRS penetration case. This variability is due to alternatives, such as VRS curtailment or load shedding, which can replace the reserve requirement. This study also showed that VRS curtailment is an effective balancing resource as an alternative to reserves.

Keywords: operating reserve demand curve; variable renewable sources; solar generation; wind generation; uncertainty; system reliability; reserve offer price; curtailment (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: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/1996-1073/16/3/1426/pdf (application/pdf)
https://www.mdpi.com/1996-1073/16/3/1426/ (text/html)

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:gam:jeners:v:16:y:2023:i:3:p:1426-:d:1053645

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().