Price responsive demand for operating reserves and energy in electricity markets with wind power

Similar to demand response for energy, operating reserve can be elastic to prices given that minimal reliability criteria are satisfied. We present a probabilistic-based framework to estimate a demand curve for operating reserves. The operating reserve is estimated accounting for uncertainties from load, thermal unit contingencies, and wind power. The resulting demand for reserves is dynamically scheduled and co-optimized with energy in the market clearing. In a case study, the framework is applied to a two-settlement electricity market with centralized unit commitment, also considering demand response for energy. We find that the proposed demand curve for operating reserves contributes to improved handling of system uncertainties and more efficient pricing of operating reserves. Price elastic demand for energy has a similar effect on dispatch flexibility and cost, but has a less significant impact on the prices for spinning reserves.