Reserve Procurement Research Articles

Energy and reserve procurement in integrated electricity and heating system: A high-dimensional covariance matrix approach based on stochastic differential equations

The integration of stochastic renewable energy sources into energy systems presents challenges due to flexibility insufficiency and uncertainty modeling inaccuracy. To address these challenges, this paper explores a high-dimensional covariance matrix approach based on stochastic differential equations (SDEs) for energy and reserve co-dispatch in integrated electricity and heating systems. By capturing the long-term correlation of wind power forecast errors, the SDE model simultaneously models point forecasts and high-dimensional positive-definite covariance matrices, resulting in a compact uncertainty set. To ensure computational efficiency, we employ duality theory to transform the stochastic co-dispatch problem with the high-dimensional uncertainty set into deterministic convex programming. Additionally, a virtual heat storage model is introduced for the district heating network, leveraging the thermal inertia of the network to enhance reserve capacity. Simulations validate the calibration and sharpness of the proposed high-dimensional uncertainty set. The results demonstrate that co-dispatch using the SDE-based uncertainty set reduces operational costs by 4.9% compared to a set that does not consider the long-term correlation of wind power, under a 95% coverage rate. Moreover, the storage capabilities of district heating pipelines and smart buildings provide cost-free reserves, saving the operational costs of the two test systems by 2.8% and 1.3%, respectively.

A potential framework for cross-zonal reserve procurement on European power exchanges based on robust optimization

In order to prepare for unexpected events in the power system, regulation reserves are routinely procured in advance. Economic considerations dictate that it is advantageous to perform reserve procurement and energy allocation on a joint market platform using a single clearing algorithm. Furthermore, it is also beneficial if the option exists to allocate resources between different bidding zones to alleviate local shortages and corresponding price pressures. The present paper proposes a solution algorithm for this task in a European market environment without unit commitment and uplift payments to non-convex bidders. The main challenge of cross-zonal reserve allocation arises from the fact that deployment decisions are not yet known, therefore the actual deployment flows are uncertain at the time of procurement. The proposed algorithm handles this issue with robust optimization techniques and provides a guarantee of feasible transmission limits for deployment i.e. reserve deliverability. The clearing model is formalized as a computationally efficient Mixed Integer Linear Problem; its exact equations are presented along with case studies for the purpose of demonstration. The research is part of the FARCROSS H2020 project of the European Union.

Valuing the social cost of carbon: Do economists really care about climate change?

The aim of the article is to analyse the scientific literature of the last decade on the social cost of carbon to identify and discuss the best values representing the external cost of CO2 emis-sions calculated with a damage valuation approach, to use in cost-benefit analysis and in other external costs applications, such as Life Cycle Assessment. The social cost of carbon repre-sents the present value of the global damages of climate change attributable to the emission of an additional ton of carbon dioxide into the atmosphere. The measurement of the social cost of carbon is fundamental in the transition to a net zero emissions economy because it allows bal-ancing the costs of investments needed for decarbonization with their benefits in terms of avoided climate damages. The paper develops and applies a method for identifying the best social cost of carbon estimates, that starts from study reviews conducted within institutional processes (IPCC, OECD, US Government bodies), to then analyse the study reviews made in academic or research contexts and only in the end it delves into selected academic studies that provide original estimates of the social cost of carbon. The method allowed to identify and dis-cuss a robust even if conservative estimate of the social cost of carbon for emissions in the period 2020-2080, recently elaborated by the US Environmental Protection Agency, that can be used worldwide, for example to update the reference external cost values for CO2 emis-sions recommended by the European Commission Handbook on external cost of transport.

Bidding strategy of storage hydropower plants in reserve markets

The increasing share of intermittent sources of energy will increase the need for frequency-control reserves. However, the supply from gas and coal-fired power plants might decrease in the following years. Being the procurement of reserves mostly market-based in Europe, the market design should send price signals to encourage participation in these markets. This pa-per analyses the incentives provided by the French market design for seasonal storage and pumped storage hydropower plants to participate in reserve markets. To that end, a determinis-tic mixed-integer linear optimization model is presented. The objective is to maximize profits in the energy and reserve markets according to 2019 market prices. By optimising the trade-offs between the day-ahead and the reserve markets, the storage hydropower plant increase its profits. The pumped storage hydropower plant sometimes chooses the Frequency Contain-ment Reserve market or the day-ahead market only. The apparition of some hours of FCR par-ticipation with the pumped storage plant is explained by its higher number of generating hours and by the higher volatility of reserve energy prices. These two factors also explain the greater response of the pumped storage plant to the incentive measures on the FCR market.

Simulation-based estimation of the economic benefits implied by coordinated balancing capacity procurement and deployment in a day-ahead market model

In this paper we analyze how increasing levels of cooperation in reserve procurement and activation affect the implied economic benefits and the respective network loads assuming various paradigms of coordination. To approach the question we construct a simulation model based on the portfolio-bidding day-ahead market clearing context, which takes into account the stochastic nature of reserve activation. Results show that the application of reserve demand netting is desirable in all considered aspects and benefits tend to saturate with increasing number of cooperating zones. Assuming the simultaneous application of the common merit order and reserve demand netting, in which case the benefits are the most significant, simulations show that reserve activation costs are reduced by 71% in the case of 4 zones, compared to the reference case with no coordination, while increasing the number of cooperating zones from 4 to 6, form 6 to 8 and from 8 to 10, implies only a further incremental improvement of 8, 3 and 2%. Regarding policy aspects the results point out that it may be desirable to facilitate the formation of multiple regional cooperation frameworks, which should be easier to establish compared to full-scale integration of reserve procurement and activation platforms.

Организация обеспечения служилых людей Сибири хлебными запасами на пути из Соли Камской до Верхотурья в 1598–1605 годах

Introduction. The article examines the problem of organizing the provision of service people in Siberia with grain reserves, which were collected as a special tax from the lands of the south-eastern part of the Pomorye during the reign of B.F. Godunov along the road from Sol Kamskaya to Verkhoturye. Methods and materials. The source base is the official material of the Verkhoturye and Solikamsk administrative huts, individual documents of the Siberian order. The method of diachronic analysis obtained a year-by-year picture of how transportation functioned from 1596/97 to 1605. The method of comparative analysis clarified the dynamics of changes in the amounts of salary fees for each individual region of the Pomorye. Analysis. The article clarifies the idea of the administrative management of Verkhoturye at the end of the 16th and beginning of the 17th centuries, gives a general description of the system for collecting and sending grain reserves, as well as the accompanying duty in the form of a ship case, clarifies the features of the organization of supplies, and systematizes and calculates their norms by year. Results. It was possible to establish that the Moscow government, first from the court of clerk I. Vakhromeev and, after 1599, from the Order of the Kazan and Meshchersky Palace, directly controlled Verkhoturye. Until 1597, supplies were carried out through Cherdyn and Lozva, and from 1598 through Sol Kamskaya in Verkhoturye. In 1596/97 and 1597/98. The largest volumes of grain reserves were supplied from the territories of Perm the Great and Vyatka. In 1600/01 and 1601/02, instead of the territory of the Pomorye, grain harvests were delivered to Sol Kamskaya from Kazan; the Pomors were engaged in transportation to Siberia. The share of transportation was higher near Vyatka and Ustyug the Great, as in 1604/05, when the collection of grain reserves resumed from the territory of the Pomorye. The scheme for public procurement of grain reserves developed by the government can be assessed as effective; however, management difficulties also arose due to the remote location of the region, abuse of the official powers of the governor, the forced need to quickly find funds to resolve issues locally, and attempts by carriers to find their own benefits and avoid losses.

Light robust co-optimization of energy and reserves in the day-ahead electricity market

To accommodate the stochasticity of variable renewable energy sources (VRES) while efficiently dispatching generation resources and procuring adequate reserves, previous research proposed co-optimizing energy and reserves in the day-ahead (DA) using various uncertainty-based mechanisms. However, the co-optimized markets based on these mechanisms exhibit implementation limitations related to their high computational burden, complex customized solution algorithms, and over-conservative solutions. To address these shortcomings, this paper proposes a practical light robust optimization (LR) approach for the DA co-optimization of energy and reserves. The method results in a linear market clearing mechanism that easily enables the control of the robustness level of the solution through a tunable conservativeness parameter. In addition, the paper explores three different formulations for specifying the system reserve requirements considering, namely, fixed reserve requirements (LRF1), variable reserve requirements based on system uncertainty (LRF2), and a combined approach (LRF3). The formulations integrate the uncertainty from VRES in the market setting using a new bid format called uncertainty bid. The three formulations are then compared using a case study. The numerical results show the effects of the variation of the conservativeness parameter and the reserve requirements on the total socio-economic welfare (SEW), dispatched energy quantities, anticipated activation costs, and procured reserves. Moreover, the analyses showcase that sizing reserves based on system uncertainty (in LRF2) results in a 27%–61% decrease in reserve procurement costs when compared with LRF1, while the combined approach (in LRF3) results in a better performance than LRF2 in terms of reserve activation costs, with costs 61%–263% lower than in LRF2.

Clustering Combined Multi-Objective Optimal Operation of Transmission Systems Considering Voltage Stability

In recent years, power systems have undergone major changes called energy transitions during which synchronous generators have been replaced with power electronics-based generation. Therefore, the voltage stability of power systems has become a major concern owing to the absence of synchronous generators. This study proposes multi-objective optimization using the non-dominated sorting genetic algorithm III to achieve optimal reactive power reserve procurement and improve the voltage stability of the overall system. These systematic approaches require high computational power and are unsuitable for the operational frameworks currently used for large-scale power systems. Previous works have rarely considered the local characteristics of reactive power or generation de-commitment with sufficient re-dispatch owing to greater renewable energy integration. We propose a framework for achieving systematic optimization by considering various objective functions while utilizing the regional aspect of reactive power via spectral clustering-based voltage control area (VCA) identification. The proposed method comprises systematic and regional approaches to optimizing systems for voltage stability improvement based on VCAs. The results demonstrate that the proposed method shows satisfactory performance. These results will be helpful for decision making for power system operations in harsher environments with more renewable energy.

Market Design for Cross-Border Co-Optimised Energy-Reserve Allocation

To achieve its energy goals, the European Union (EU) needs to establish a geographically large market by initially improving its cross-border electricity interconnections. The Hungarian project focuses on this topic. A geographically large market, based on imports and exports of electricity, could increase the level of competition, boost the EU’s security of electricity supply through creating alternative routes to the customers and integrate more renewables into energy markets. Electricity should, as far as possible, flow between Member States as easily as it currently flows within Member States, in order to increase sustainability potential and real competition, as well as to drive economic efficiency of the energy system. To this end, Facilitating Regional CROSS-border Electricity Transmission (FARCROSS) aims to address this challenge by connecting major stakeholders of the energy value chain and demonstrating integrated hardware and software solutions that will facilitate the “unlocking” of the resources for the cross-border electricity flows and regional cooperation. The targets of the project are to optimise the usage of the available cross-border capacity for reserve procurement while transitioning from ATC to Flow-based mechanism, to achieve simultaneous interconnector reservation for energy and balancing capacity to enable reserve market coupling and to create state-of-art technologies to materialise market coupling platforms.

Two Amendments for Reserve Procurement in Electricity Markets to Enhance Real-Time Compatibility and Boost Flexibility

Two Amendments for Reserve Procurement in Electricity Markets to Enhance Real-Time Compatibility and Boost Flexibility

Evaluating the role of waste-to-energy and cogeneration units in district heatings and electricity markets

This paper investigates the activity of a multi-utility that uses Waste-to-Energy (WtE) and cogeneration (COG) plants to provide services in the heat and in the electricity markets. We assume that it employs WtE and COG units to participate in the day-ahead and real-time electricity markets and, with the support of heat-only units, it satisfies the heat demand of local district heating areas (DHAs). We use stochastic programming to develop three linked problems that describe the sequence of the decision process regarding the operation of WtE and COG facilities: (i) the first problem considers the point of view of the multi-utility that defines the day-ahead and the real-time heat scheduling of its plants and the maximum amount of electricity that WtE and COG units can offer in the day-ahead electricity market, taking into account the uncertainty of the real-time heat demand; (ii) the second problem models the day-ahead electricity market cleared by the Power Exchange, where the electricity dispatch of WtE and COG units is limited by the maximum power offers defined in step (i); and (iii) given the heat and power schedules respectively determined in steps (i) and (ii), the last problem describes the activity of theTransmission System Operator that re-dispatches WtE and COG outputs and decides their participation in the reserves and the real-time electricity markets, incorporating uncertain electricity demand and renewable power generation. Italian data are taken to investigate the operation of the WtE and COG plants under different assumptions. A reference analysis shows that these facilities obtain stable revenues from the heating market, but those from the electricity markets are very variable and mainly derives from reserve procurement. In addition, we perform two sensitivity analyses: in the first one, where we consider high natural gas and CO_2 prices, the use of WtE and COG units increases to substitute gas-fueled plants with a consequent increase of their profits; in the second one, which describes an electricity market with a high renewable penetration, the activity of these facilities becomes more irregular because of the augmented penetration of intermitted renewable generation.

A decentralized stochastic bidding strategy for aggregators of prosumers in electricity reserve markets

Recent years have seen an increasing interest in demand response as a means to provide flexibility and support the penetration of renewable resources in the power system. Aggregators play a key role, in this regard, by enabling the participation of small-scale distributed energy resources and loads connected at the distribution network into local and central markets.This paper proposes an optimal strategy to support aggregators of a large number of small prosumers to participate in the tertiary reserve procurement market. In particular, a two-stage decentralized approach is proposed in which, first, prosumers individually optimize their flexible appliances schedule according to their own requirements and preferences, without sharing any information with the aggregator. At the aggregator level, a trading strategy is proposed for participation in the reserve market aiming at maximizing the aggregator’s profit under the pay-as-bid pricing scheme, while only requiring a linear programming formulation ensuring the efficiency of the trading problem. In the developed approach, a scenario-based stochastic programming method is introduced to capture the uncertainties of market prices, weather conditions, loads, and user behavior.To demonstrate the applicability of the proposed method, using real data, simulations on 2500 small prosumers in a realistic setting are carried out. The proposed linear and decentralized method can be executed within a few minutes, enabling its applicability for aggregators with a large number of customers.

A Scenario-Oriented Approach to Energy-Reserve Joint Procurement and Pricing

We consider some crucial problems related to the secure and reliable operation of power systems with high renewable penetrations: how much reserve should we procure, how should reserve resources distribute among different locations, and how should we price reserve and charge uncertainty sources. These issues have so far been largely addressed empirically. In this paper, we first develop a scenario-oriented energy-reserve co-optimization model, which directly connects reserve procurement with possible outages and load/renewable power fluctuations without the need for empirical reserve requirements. Accordingly, reserve can be optimally procured system-wide to handle all possible future uncertainties with the minimum expected system total cost. Based on the proposed model, marginal pricing approaches are developed for energy and reserve, respectively. Locational uniform pricing is established for energy, and the similar property is also established for the combination of reserve and re-dispatch. In addition, properties of cost recovery for generators and revenue adequacy for the system operator (SO) are also proven. Simulations validate the effectiveness of the proposed mechanism.

Procurement of Energy, Primary Regulation, and Secondary Regulation Reserves in Battery Energy Storage Systems Integrated Real-Time Electricity Markets

In recent years, battery energy storage systems (BESS) have been considered as promising resources to provide regulation services because of their operational flexibility. In this article, a novel framework and mathematical model are proposed for simultaneously procuring primary regulation (PR) and secondary regulation (SR) reserves alongside energy, in a BESS integrated, locational marginal price (LMP) based real-time market. The BESS submits discharge offers considering degradation cost, based on depth of discharge and discharge rate. The proposed model takes into consideration <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">a priori</i> cleared day-ahead market (DAM) schedules and accounts for scenarios of load deviations and contingencies in real-time operations. The impact of BESS participation on system operation and market settlement is examined considering two participation options: 1) BESS bidding as the generator/load with price quantity pair; 2) BESS participation using the offers based on degradation cost. The proposed model is validated on the IEEE Reliability Test System to demonstrate its functionalities.

Reliability-aware probabilistic reserve procurement

Current reserve procurement approaches ignore the stochastic nature of reserve asset availability itself and thus limit the type and volume of reserve offers. This paper develops a reliability-aware probabilistic approach that allows renewable generators and load ensembles to offer reserve capacity with reliability attributes. Offers with low reliability are priced at lower levels. The original non-convex market clearing problem is approximated by a MILP reformulation. The proposed probabilistic reserve procurement allows restricted reserve providers to enter the market, thereby increases liquidity and has the potential to lower procurement costs in power systems with high shares of variable renewable energy sources.

An insurance mechanism for electricity reliability differentiation under deep decarbonization

Securing an adequate supply of dispatchable resources is critical for keeping a power system reliable under high penetrations of variable generation. Strategic reserves have been used by a range of jurisdictions to procure investment in additional generation reserves given the missing money problem in energy only market designs. Given the growing flexibility and heterogeneity of load enabled by advancements in distributed resource and control technology, strategic reserve procurement needs to be able to reflect the different preferences of energy consumers. To address this challenge this paper develops an insurance risk mechanism for the procurement of strategic reserves that is adapted to a future with variable generation and flexible demand. The proposed design introduces a central insurance scheme with prudential requirements that align diverse consumer reliability preferences with the financial objectives of an insurer-of-last-resort. We illustrate the benefits of the scheme in (i) differentiating load by usage to enable better management of the system during times of extreme scarcity, (ii) incentivizing incremental investment in generation infrastructure that is aligned with consumer reliability preferences and (iii) improving overall reliability outcomes for consumers.

Towards Optimal Coordination Between Regional Groups: HVDC Supplementary Power Control

With Europe dedicated to limiting climate change and greenhouse gas emissions, large shares of Renewable Energy Sources (RES) are being integrated in the national grids, phasing out conventional generation. The new challenges arising from the energy transition will require a better coordination between neighboring system operators to maintain system security. To this end, this paper studies the benefit of exchanging primary frequency reserves between asynchronous areas using the Supplementary Power Control (SPC) functionality of High-Voltage Direct-Current (HVDC) lines. First, we focus on the derivation of frequency metrics for asynchronous AC systems coupled by HVDC interconnectors. We compare two different control schemes for HVDC converters, which allow for unilateral or bilateral exchanges of reserves between neighboring systems. Second, we formulate frequency constraints and include them in a unit commitment problem to ensure the N-1 security criterion. A data-driven approach is proposed to better represent the frequency nadir constraint by means of cutting hyperplanes. Our results suggest that the exchange of primary reserves through HVDC can reduce up to 10% the cost of reserve procurement while maintaining the system N-1 secure.

Strategic bidding of an energy storage agent in a joint energy and reserve market under stochastic generation

This work presents a bi-level optimization model for a price-maker energy storage agent, to determine the optimal hourly offering/bidding strategies in pool-based markets, under wind power generation uncertainty. The upper-level problem aims at maximizing storage agent's expected profits, whereas at the lower-level problem, a two-stage sequential market clearing procedure takes place. The first stage refers to a jointly cleared energy and reserve day-ahead market, deriving the optimal quantities for energy dispatch and reserve procurement, while at the second stage, a real-time energy-only market settlement is realized, considering plausible wind power generation scenarios. Real-time decisions include activated upward and downward reserves, already procured in the day-ahead market. The bi-level model is initially transformed into a mathematical program with equilibrium constraints -by recasting the lower-level problem using its Karush-Kuhn-Tucker optimality conditions-, which is further reduced into a mixed integer linear program. The proposed mathematical framework is applied to a 6-bus power grid, incurred by network transmission constraints. Numerical simulations illustrate an explicit perspective of the potential arbitrage opportunities for the storage agent, when acting strategically in energy and reserve markets, under wind generation increment scenarios and plausible transmission line congestions.

Frequency restoration reserves procurement with HVDC systems

Frequency control ancillary services play an essential role in the secure real-time operation of power systems. Procurement of these services is critical because of the availability and cost of resources and uncertainty in power generation due to the increasing number of renewable sources. Due to the changing generation mix, it is crucial that the transmission system operator has access to the resources for these services. As the number of HVDC interconnections is increasing in Europe, it is imperative to consider their utilization for reserve procurement. This paper proposes a mathematical model for examining the economic aspects of frequency restoration reserves procurement with HVDC systems. The proposed model is used for analysis on two asynchronous systems connected via an HVDC link. The analysis shows that procurement of frequency restoration reserves with HVDC systems increases social welfare; however, it is highly dependent on the availability of HVDC systems capacity.

Unified modelling of gas and thermal inertia for integrated energy system and its application to multitype reserve procurement

The multi-energy coupling characteristic of integrated energy system helps to promote energy efficiency improvement and facilitate renewable energy integration. However, the growing complexities from multi-energy coupling and the increasing uncertainties of renewable generations are both threatening the synergistic operation. It is imperative to fully exploit the flexibility of integrated energy system for operating reliability and economy. In view of the essential similarities from the slow dynamics of gas and thermal systems, a unified gas and thermal inertia model for integrated energy system is proposed in this paper for flexibility excavation and optimal allocation. First, gas and thermal inertia is uniformly defined considering inertial characteristics. Furthermore, a method for unified modelling of gas and thermal inertia is accurately illustrated based on the dynamic model of gas and thermal system. To prove the validity of the unified model, a multitype reserve procurement scheme considering gas and thermal inertia is proposed. A typical community-scale integrated energy system is employed as a test system. The simulation results demonstrate the potential ability of gas and thermal inertia to improve the operational flexibility, reliability and economy of integrated energy system.