Pricing Energy and Reserves Using Stochastic Optimization in an Alternative Electricity Market

Author

Wong, Steven ; Fuller, J. David

Author_Institution

Dept. of Manage. Sci., Waterloo Univ., Ont.

Volume

22

Issue

2

fYear

2007

fDate

5/1/2007 12:00:00 AM

Firstpage

631

Lastpage

638

Abstract

This paper presents a stochastic linear programming model that can be used for pricing in electrical energy and reserve markets. It addresses capacity, energy, and reserve dispatch problems that may arise from n-1 contingency scenarios. Possible market solutions focusing on generator compensation using real-time, day-ahead, and hybrid schemes are enumerated, along with opportunities for consumer pricing and transmission costing. This model is illustrated on a 6-bus test system as well as a larger 66-bus system representing the Ontario network. A key difference among schemes is the degree of risk to the generators, measured by variance in profit

Keywords

linear programming; power generation economics; power markets; power transmission economics; stochastic processes; Ontario network; consumer pricing; electrical energy pricing; electricity markets; energy-reserve pricing; hybrid schemes; n-1 contingency methods; reserve dispatch problems; reserve markets; stochastic linear programming model; transmission costing; Availability; Costs; Councils; Economic forecasting; Electricity supply industry; ISO; Load forecasting; Power generation; Pricing; Stochastic processes; $n-1$ contingency criterion; Electricity markets; energy and reserve pricing; operating reserves; stochastic optimization;

fLanguage

English

Journal_Title

Power Systems, IEEE Transactions on

Publisher

ieee

ISSN

0885-8950

Type

jour

DOI

10.1109/TPWRS.2007.894867

Filename

4162624