LMP-Based Day-Ahead Electricity Market Design Considering the Participation of DR and BESS

Abstract

Demand Response (DR) and Battery Energy Storage Systems (BESS) are promising options for system balancing in response to uncertainties arising from high penetration of renewable energy sources (RES) and grid contingencies. This paper presents a novel DR and BESS integrated, locational marginal price (LMP)-based day-ahead market (DAM) framework and mathematical model. The proposed model examines the participation of DR and BESS in an energy and spinning reserve (SR) co-optimized electricity market. It includes consumer preferences in providing DR, and a BESS cost model based on depth of discharge (DOD) and discharge rate. The mathematical model, formulated as a mixed integer programming (MIP) problem, is implemented on the IEEE Reliability Test System (RTS). Several case studies demonstrate the merits of the proposed framework and their impact on marginal prices, market settlement and system operation.