On modeling of the long term electricity markets in systems with wind and demand response

Increasing proportion of stochastic generation implies risks for the electric grid operation. On the other hand, demand response is expected to lower reserve costs and to flatten the load profile. In this paper we investigate how to model these new conditions and we assess the impact of the new market design. We consider the existing deterministic market and suggest a stochastic economic dispatch that co-optimizes energy and reserve markets and can be used for the long-term forecasting of market outcomes. We solve it by employing a DC stochastic optimal power flow. Testing our method against the deterministic approach as for both the dispatch costs and the robustness we show that the stochastic formulation may lead to more costly results but is also more robust compared to the deterministic one. Sensitivity studies demonstrate the impact of the wind uncertainty and the demand response on the economic dispatch costs.