Decision making model for determining firm energy and generation reserves assuming demand follows a doubly truncated normal distribution

Adequate generation reserves are needed to avoid failures in case electricity demand exceeds available online generation capacity. Properly determining generation reserves promotes efficient resource allocation. This paper establishes a model to purchase optimal quantities of firm energy and of various reserve capacities for a dispatch period to cover randomness in demand considering transmission network, contingency constraints and costs to start and stop reserve generators. Demand is modeled using a Doubly-truncated Normal Distribution. A synthetic example consisting of 27 generators selling firm and reserve energy created to replicate the operational conditions for a dispatch period of the Midwest Independent System Operator (MISO) is presented to illustrate the proposed procedure.