Power Reserve Management by Two-Stage Stochastic Programming

Although bilateral trades and spot markets aim to balance power supply and demand, real-time imbalances may still occur due to nonanticipated supply and demand behavior. The real-time balance is the responsibility of the power system operator and is achieved by means of regulation purchased in a corresponding market. To ensure sufficient regulation in the market, the system operator has the possibility of reserving regulating power in advance. As reserves are however purchased prior to actual operation reserve decisions are naturally subject to supply and demand uncertainty. In contrast, regulation decisions can be deferred until uncertainty has been observed and the system is operating. In the present paper this is formalized by formulating the regulating reserve management problem as a two-stage stochastic program. A case study that concerns the regulating reserve management problem of the system operator of Western Denmark is discussed in detail.