Abstract
The maximization of output from variable renewable energy (VRE) sources considering system operational constraints (SOCs) is a traditional method for maximizing VRE generators’ profits. However, in wholesale electricity markets, VRE participation tends to reduce marginal prices (MP) because of its low marginal costs. This circumstance, called the “merit-order effect” (MOE), reduces the generators’ profits. Thus, the traditional method is possibly no longer the best and only method to maximize the generators’ profits. Moreover, the VRE support schemes also affect MP, making MOE more severe. VRE curtailment can relieve MOE, but VRE output must be decreased, thereby reducing the generators’ profits. This paper proposes a method to find the optimal VRE generation schedules that maximize VRE generators’ profits while considering the trade-off among the VRE output, MP, and SOCs. The method combines the merit-order model and the unit-commitment model solved by the optimization tools in MATLAB. Thailand’s electrical system was the test system. The result shows that VRE generators’ profits from the proposed method are significantly higher than from the traditional method when the system has high wind penetration, and the generators have no support scheme. Curtailing approximately 7–10% of wind output can increase the average MP by 23.6–30%.
Highlights
The methods to illustrate merit-order effect” (MOE) are based on two main approaches: first, the development of electricity market models which simulate the operation of a wholesale electricity market and calculate the resulted marginal prices (MP) for various scenarios; second, the regression analysis approach, which uses historical prices and generation data to quantify the actual reductions in MP for a given period
The main contribution of this paper is a method for finding the optimal variable renewable energies (VRE) generation schedules which maximize the profits of VRE generators
The method considers the tradeoff among the amount of VRE output, the MP, and the system operational constraints (SOCs)
Summary
Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations. A traditional method to leverage low-cost resources, i.e., VRE, is to maximize its generated electricity (output). Any generators in wholesale electricity markets gain their revenue based on MP; MOE contributes to reductions in the generators’ revenue. As a result, maximizing VRE output into wholesale electricity markets cannot allow maximum profits from the generators. VRE generators might curtail their output following their strategic aim to maximize profits from the markets [18,25,26]. The method needs to satisfy the SOCs. There have been several studies dealing with VRE curtailment optimization in generation systems; both technical and economic issues were considered. Demonstrated an analytical model that can solve a two-period unit-commitment problem considering the SOCs and a model of energy production to study the mechanisms of VRE curtailment for economic reasons.
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