Impact of Growing Share of Renewable Energy Sources on Locational Marginal Prices

Abstract

In this paper, the impact of renewable energy sources (RES) on the locational marginal prices (LMP) of a fully competitive pool-based electricity market is analysed. Renewable energy sources are usually given the highest priority in market clearing problem by assigning zero or negative energy offer prices. It is expected that inclusion of such sources with zero bidding price would bring down the marginal price, especially as the penetration of such sources increases. In this paper, changes in LMPs observed under different levels of wind penetrations into conventional grid have been analysed. It is observed that in congested networks, in some buses LMP increases with increase in wind penetration instead of decreasing. Secondly, a tipping point is observed in the nature of LMP at every bus. In the case study adopted for validation in this paper, the nature of LMP changes when wind penetration has gone beyond 20%. Analysing such changes in LMPs provide insight to the market participants such as conventional power plant owners, wind turbine owners and demand response aggregators into the nature of LMP. This would, in turn, help them in optimally plan their bidding and offer strategies.