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Title: Distribution-level markets under high renewable energy penetration
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).  more » « less
Award ID(s):
2129631
PAR ID:
10414031
Author(s) / Creator(s):
; ;
Date Published:
Journal Name:
Thirteenth ACM International Conference on Future Energy Systems (ACM e-Energy 2022)
Page Range / eLocation ID:
127 to 156
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
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