Value of flexible resources, virtual bidding, and self-scheduling in two-settlement electricity markets with wind generation - Part II: ISO Models and Application

Jalal Kazempour*, Benjamin F. Hobbs

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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Abstract

In Part II of this paper, we present formulations for three two-settlement market models: baseline cost-minimization (Stoch-Opt); and two sequential market models in which an independent system operator (ISO) runs real-time (RT) balancing markets after making day-ahead (DA) generating unit commitment decisions based upon deterministic wind forecasts, while virtual bidders arbitrage the two markets (Seq and SeqSS). The latter two models differ in terms of whether some slow-start generators can self-schedule in the DA market while anticipating probabilities of RT prices. Models in Seq and Seq-SS build on components of the two-settlement equilibrium model (Stoch-MP) defined in Part I of this paper [1]. We then provide numerical results for all four models. A simple single-node case illustrates the economic impacts of flexibility, virtual bidding, and self-schedules, and is followed by a larger case study based on the 24-node IEEE reliability test system. Their results confirm that flexible resources, including fast-start generators and demand response, can reduce expected costs in a sequential two-settlement market. In addition, virtual bidders can also improve the functioning of sequential markets. In some circumstances, virtual bidders (together with self-scheduling by slow-start generators) enable deterministic ISO DA markets to obtain the least (expected) cost unit commitments.
Original languageEnglish
JournalIEEE Transactions on Power Systems
Volume33
Issue number1
Pages (from-to)760 - 770
ISSN0885-8950
DOIs
Publication statusPublished - 2018

Bibliographical note

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Keywords

  • Operational flexibility
  • Wind uncertainty
  • Equilibrium
  • Day-ahead
  • Real-time
  • Demand response
  • Virtual bidding

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