Modelling counter-intuitive effects on cost and air pollution from intermittent generation

Javad Khazaei (), Anthony Downward and Golbon Zakeri

Annals of Operations Research, 2014, vol. 222, issue 1, 389-418

Abstract: In this paper, we first present a market environment with a conventional two settlement mechanism. We show that when we add some wind generation to the system, the steady-state market conditions yield lower social and consumer welfare and higher use of fossil fuels. We also present results of a counterfactual stochastic settlement market which improves social and consumer welfare after the introduction of new intermittent generation. Thus, we conclude that the choice of market mechanism is a critical factor for capturing the benefits of large-scale wind integration. We also introduce a method to compute analytical equilibria of games in which the payoff functions of players depend on the optimal solution to an optimization problem with inequality constraints. Copyright Springer Science+Business Media New York 2014

Keywords: Electricity markets; Uncertainty; Wind energy; Inefficiency; Cost of wind integration; Game theory; Stochastic optimization; Equilibrium models (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10479-012-1281-4

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