Distributed Resource Participation in Local Balancing Energy Markets

In response to the new and potentially conflicting economic and technical demands of independent, distributed resources, the power system requires a new means for coordinating system and market operations. Price signals are one mechanism available to coordinate the operation of a power system in the emerging competitive markets. This paper discusses the integration of distributed resources into the operations of the power system by means of organizing the resources into microgrids and allowing them to participate in local electricity markets through responding to price signals. The simulations of price signals proposed in this paper successively expand upon the current open loop market framework. For distributed resources to participate in energy markets and provide energy balancing two new price mechanisms are introduced and analyzed. First, an open loop strategy is introduced, based upon the concept of a proposed price-droop. Second, a closed loop strategy using a hypothesized dynamic cost equation is introduced. The behavior of distributed resources responding to these two proposed mechanisms is compared to their behavior in a strictly competitive environment.