Quantification of the economic impacts of ramping capability products in a multi-settlement market structure

Vila Verdaguer, Jordi

Permalink

https://hdl.handle.net/2142/99317 Copy

Description

Title

Quantification of the economic impacts of ramping capability products in a multi-settlement market structure

Author(s)

Vila Verdaguer, Jordi

Issue Date

2017-11-02

Director of Research (if dissertation) or Advisor (if thesis)

Gross, George

Department of Study

Electrical & Computer Eng

Discipline

Electrical & Computer Engr

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

M.S.

Degree Level

Thesis

Keyword(s)

• Power systems
• Ramping products
• Electricity markets

Abstract

Deeper penetration of renewable resources is increasing the operational ramping requirements of actual power systems. The increase in renewable energy resources and, more generally, variable energy resources has been identified by ISOs and academics alike as a defining factor for the need of increased ramping resources in power grids. In addition, concerns about the availability of conventional dispatchable generation during harsh climatic conditions and fuel shortages are starting to be raised. Ramping capability products (RCPs) are the current solution being developed to solve these issues and tackle the increasing randomness and variability in today’s power systems. They aim to provide short-term ramping capability to operators to meet forecasted and unforecasted ramping demand while they economically reward the provision of the ramping capability and as a consequence explicitly reward the flexibility of the resources supplying it. The motivation of these studies lies in the assessment of the economic impacts of such products on a large-scale system. We construct a flexible stochastic multi-settlement market simulation approach which explicitly represents the RCPs and takes into account current market designs and the regulatory environment for such purpose. Through the case studies performed, we pinpoint the ability of the RCPs to reduce price volatility resulting from the additional supply of ramp. Extremely high price events are reduced to the expense of an increase in prices during low net load periods. Additionally, we illustrate that there is an in- crease in reliability in the intra-day markets from the incorporation of the RCPs through a reduction in the expected unserved energy. Furthermore, we find the limitation of the RCPs to substitute other capacity-based products in the RTM as the provision of ramping need not mean that additional capacity is also supplied. Regarding the payments to the sellers, we show that RCPs effectively unbundle the provision of energy and ramping capability. Based on these results, we conclude that a market structure which includes RCPs is subject to smoother prices and sees a reduction in price spike events caused by the punctual lack of ramp due to the sources of uncertainty in our system: the wind output and the solar output. From the reduction in price volatility at the expense of an increase in average prices across low net load periods, we conclude that for smoother operations and market performance, market designs should include incentives in high volatility periods. Such products inherently provide the system with ramping reserve which equips the system operator with additional levels of freedom when trying to maintain the power balance. In addition, we illustrate through the hydro re- sources modeled and through the impact of its energy offering strategy that given the unique nature of storage and its ability to provide ramp, there will still be a big unknown impact of this technology on RCPs. Such impact will directly affect market settlements with a time horizon which concords with the physical capabilities of the energy storage resources (ESR). As a consequence, RCP designs need to be accommodated to integrate the various ESR technologies in order to profit from their potential. In addition, we have shown the limited impact of the RCPs in real-time markets. The lack of reserve capacity is a bigger constraint in such markets as the provision of ramping capability need not mean that capacity is also provisioned. Derived from this conclusion, the need to assess the market interactions of the various capacity-based ancillary services arises. Such interactions will enable one to determine the appropriate market rules and structure to ensure correct operation and increased reliability in the system. Regarding the payments to the sellers, we show that the incorporation of the RCPs provides an incentive to the sellers to participate in offering the products as there is an increase in the payments to such sellers when these are incorporated. The RCPs effectively unbundle the provision of energy and ramp, rewarding the sellers separately for each product and yielding clearer and more competitive prices for them. Still, with current market designs, complete competitiveness can- not be achieved. A socialization of the uplift payment allocation is needed to allow units producing for short periods to economically participate in the system. Overall, through the various points made, we conclude that RCPs need to be considered, designed and improved not in isolation but in the context of a holistic market re-design.

Graduation Semester

2017-12

Type of Resource

text

Permalink

http://hdl.handle.net/2142/99317

Copyright and License Information

Copyright 2017 Jordi Vila

Owning Collections