Abstract
While variable renewable energy (VRE) has been developed for decades, VRE market participation is developing relatively slowly, despite the potential economic efficiency it may bring. This paper tries to specify the efficiency of VRE in a deregulated pool-based electricity market. Based on standard pool-based market design, this paper built a direct current optimal power flow (DC-OPF) based simplified 2-settlement spot electricity market model conjugating electricity and ancillary service clearing. To address the outcomes of the imperfect market in the real world, this paper studied the consequences brought by agents’ learning and strategic behaviors. Simulations under different ancillary service levels and reliability cost levels are carried out. The results show that VRE may be unprofitable in the market, especially when learning and strategic behavior is considered. Learning and strategic market behavior will also hamper the role of VRE as a “better” energy source. This paper shows and proves a locational marginal price (LMP) disadvantage phenomenon, which will lead to low profitability of VRE. Three major suggestions are given based on the results.
Highlights
Variable renewable energies (VREs) such as photovoltaic (PV) and wind have become important sources of renewable and clean energy
The result of this paper shows that theoretically, VRE can increase its profitability by adding related reliability cost in a spot market
Market value Mw of generation company (GenCo) w is the weighted average of the Locational marginal price (LMP) and ancillary service price
Summary
Variable renewable energies (VREs) such as photovoltaic (PV) and wind have become important sources of renewable and clean energy. As the installed capacity has grown, the development of VRE has encountered some serious problems. The VRE projects encounter financial feasibility problems without government subsidies [2,3]. Curtailments which are usually not expected in feasibility studies of VRE projects emerge and tend to increase with the growth of installed capacity [4,5,6,7]. These phenomena bring barriers to sustainable development and economic burdens to the society
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
