Distributed energy resources in electricity markets: The price droop mechanism

Distributed energy resources (DER), including small-scale generation, renewable energy technologies, and demand response, are disadvantaged with respect to central generating facilities as a consequence of being excluded from regional energy and ancillary services markets. This paper proposes a price-based open-loop control signal to facilitate significantly increasing DER penetration in the power system by coordinating their participation in electricity markets while also maintaining the local system energy balance. The proposed signal introduces the concept of “price droop” that is based upon the concepts of frequency droop and own price elasticity. The use of this signal is demonstrated in a variety of scenarios with DER in a microgrid operating in islanded mode.