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coordination of timing of reserve capacity and day-ahead electricity markets

 
Titel
Coordination of timing of reserve capacity and day-ahead electricity markets
Type
artikel vakblad
Referentie

Abbasy, A; R.A.C. van der Veen; R.A. Hakvoort: Coordination of timing of reserve capacity and day-ahead electricity markets, pp. 1-11. In: Proceedings of the 11th IAEE European Conference, 25-28 August (2010). At: Vilnius (Lithuania). ISSN: 1559-792X.

Auteurs
Rudi Hakvoort
 
Reinier van der Veen
Document
Beschrijving

The typical wholesale electricity markets, mainly Day-Ahead (DA) and Intra-day (ID), are not the only marketplaces within the broad context of restructured market-based power systems. Due to the unique technical characteristics of electricity as a product, several services are needed for secure and reliable operation of the grid, mainly known as Ancillary Services. One critical category of these services consists of different types of reserves that need to be available in order to balance supply and demand in real-time; also known as Balancing Services. Providers of these services are generators (and in some cases, willing consumers) who offer some part of their available capacity as reserves to the system operator, who is responsible for system security. Thus, Reserve Capacity (RC) markets are created.

The complicating factor in design of reserve capacity markets is that generators have the opportunity to offer their free capacity in DA and ID markets or in reserve capacity markets. In other words, these different markets compete with each other for attracting bids. Therefore, design of reserve capacity markets can not be done in isolation from other electricity markets. This paper focuses on coordination of timing of reserve capacity markets and DA markets and it studies the effect of alternative clearance sequences of DA and RC markets.

Using an intuitive argument, the authors in [1] mention that in order to avoid low liquidity and higher prices, the RC market must be closed before the DA market, and it is confirmed by [2] that in order to ensure that the system operator has the reserves to maintain system security, the RC market should be the first. However, the issue of the sequence of these two markets is still an open question and there are examples in various systems in which the RC market is cleared after the closure of the DA market, e.g. the regulation market in PJM is closed one hour before the hour of operation while the DA market is obviously cleared on a day-ahead basis, [3]-[4]. In our analysis, three cases are defined: Case A represents simultaneous clearance, in Case B the first market is the RC market and then the DA market is cleared, and in Case C the DA market is first and the RC market is cleared afterwards. The objective of this study is to see how these different possible designs can influence the behaviour of bidders in the two markets, using market clearing prices and volumes of the offered capacity in each market as the main indicators. A simulation model is developed in MATLAB, which focuses on behaviour of the generators as “sellers” in both the DA and RC market. Each generating unit decides on its offered capacities in the two markets (bid capacities) and the corresponding bid prices in each round of the simulation. Units revise their bid capacities and prices in each round using the market outcome of the previous rounds.

The paper is structured as follows: The detailed description of the simulation model is presented in section II, the three cases and their differences are discussed in the third section, the numerical results are presented in section IV and the last section discusses the conclusions of this study.

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