A Day-Ahead Joint Energy and Uncertainty Reserve Market Clearing Model to Manage VRE Uncertainty

Abstract

The existing electricity market designs may be not compatible with high penetration of Variable Renewable Energy Sources (VRE) in power systems and need to be improved to address VREs' variability and uncertainty. VREs require flexibility and additional reserve capacities from conventional power plants to offset their real-time deviation from the forecasted output power. Another important issue regarding VRE market participation is the relatively low market clearing prices which in turn threatens the profitability of conventional generators. To address these issues, this paper contributes in modelling a central framework to provide uncertainty reserve service which is simultaneously optimized with energy procurement in day-ahead market. The uncertainty reserve is remunerated through day-ahead reservation price and real-time activation price. The proposed market clearing mechanism is able to provide fair and competitive supplementary revenue stream for conventional generators, while it ensures adequate reserve capacities in an hourly basis, taking into account network constraints, to address VRE variability and uncertainty.