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We study the market structure for emerging distribution-level energy markets with high renewable energy penetration. Renewable generation is known to be uncertain and has a close-to-zero marginal cost. In this paper, we use solar energy as an example of such zero-marginal-cost resources for our focused study. We first show that, under high penetration of solar generation, the classical real-time market mechanism can either exhibit significant price-volatility (when each firm is not allowed to vary the supply quantity), or induce price-fixing (when each firm is allowed to vary the supply quantity), the latter of which leads to extreme unfairness of surplus division. To overcome these issues, we propose a new rental-market mechanism that trades the usage-right of solar panels instead of real-time solar energy. We show that the rental market produces a stable and unique price (therefore eliminating price-volatility), maintains positive surplus for both consumers and firms (therefore eliminating price-fixing), and achieves the same social welfare as the traditional real-time market. A key insight is that rental markets turn uncertainty of renewable generation from a detrimental factor (that leads to price-volatility in real-time markets) to a beneficial factor (that increases demand elasticity and contributes to the desirable rental-market outcomes).
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Marginal Uncertainty Cost Functions for Solar Photovoltaic, Wind Energy, Hydro Generators, and Plug-In Electric Vehicles
The high penetration of renewable sources of energy in electrical power systems implies an increase in the uncertainty variables of the economic dispatch (ED). Uncertainty costs are a metric to quantify the variability introduced from renewable energy generation, that is to say: wind energy generation (WEG), run-of-the-river hydro generators (RHG), and solar photovoltaic generation (PVG). On other side, there are associated uncertainties to the charge/uncharge of plug-in electric vehicles (PEV). Thus, in this paper, the uncertainty cost functions (UCF) and their marginal expressions as a way of modeling and assessment of stochasticity in power systems with high penetration of smart grids elements is presented. In this work, a mathematical analysis is presented using the first and second derivatives of the UCF, where the marginal uncertainty cost functions (MUCF) and the UCF’s minimums for PVG, WEG, PEV, and RHG are derived. Further, a model validation is presented, considering comparative test results from the state of the art of the UCF minimum, developed in a previous study, to the minimum reached with the presented (MUCF) solution.
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- Award ID(s):
- 1646229
- PAR ID:
- 10211818
- Date Published:
- Journal Name:
- Energies
- Volume:
- 13
- Issue:
- 23
- ISSN:
- 1996-1073
- Page Range / eLocation ID:
- 6375
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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- Free Publicly Accessible Full Text
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Accepted Manuscript1.0
- Journal Article:
- https://doi.org/10.3390/en13236375
