A system dynamics approach for evaluating the optimum value of reliability-based incentive mechanism for wind generation in GEP

Large integration of intermittent wind generation in power system has necessitated the inclusion of more innovative and sophisticated approaches in power system investment planning. The intermittent nature and uncertainties of wind power generation will cause the investors encounter risk in their investment decisions. Main factors such as uncertainties in demand, fuel price, wind power generation which affect long-term planning have been considered in the proposed model. In this paper, a reliability-based incentive mechanism is proposed for promoting wind power generation in a competitive electricity market. The optimum amount of this incentive is calculated based on system dynamics approach. Game theory is applied for modeling the strategic uncertainties among market players in spot power market. To do this, the Cournot game concept is used and the Nash equilibrium is calculated for each state. In order to evaluate system reliability, LOEEpu is considered as the reliability index in generation sector. Numerical studies confirm that the proposed incentive model can promote wind power expansion, while maintaining the system reliability in a predetermined level.