Optimum simultaneous clearing of energy and spinning reserve markets using cost/benefit analysis

Considering the high level of interactions between energy and reserve markets, simultaneous clearing of these markets has been shown to provide more efficient solutions, than a sequential market clearing process. In addition, determining reserve requirements based on probabilistic approaches results in more economical efficiency, while maintaining an acceptable level of reliability, compared to deterministic approaches. This paper proposes a new method for clearing energy and spinning reserve markets simultaneously, while at the same time, spinning reserve requirements are determined based on a cost/benefit analysis as a probabilistic-based approach. This cost/benefit analysis considers both the costs of providing extra reliability and the benefits of fewer customer interruptions to the society. Case studies for modified IEEE reliability test system demonstrate the usefulness and efficiency of the proposed method.