Alternate mechanisms for integrating renewable sources of energy into electricity markets

The objective of this paper is to contrast the effect of demand side versus supply side policies aimed at operating a secured system, while maintaining the sustainability of the system by analyzing: 1) the role that load following costs can have in counteracting the impact of unpredictable Renewable Energy Sources (RES) on system operation and 2) The optimal management of Deferrable (or controllable) demand, given the inter-temporal constraints they face, to be coupled with RES. This will extend the concept of controllable loads to include thermal storage, and in particular, the use of ice batteries to replace standard forms of air-conditioning (AC). The analysis is done by simulation in Matpower ([1]) for a Multi-period, stochastic, security constrained AC optimal power flow. This is a continuation of work in stochastic AC-OPF modeling ([2]). A set of constraints reflecting specific ramping costs for all generation is included. The expected amount of Load Not Served (LNS) is also endogenously solved. Wind is modeled as the RES, with a characterization similar to historical data from New York and New England. The network model is a reduction of the Northeastern Power Coordinating Council (NPCC, [3]), modified to focus on New York and New England. Since the adoption of renewables leads to higher cost of capacity for conventional generation, new investments need to be made to be able to manage the load in more economical ways. A load-following ramping reserve product is proposed as an example of a mechanism for participants to signal their technical characteristics and constraints. Investments in storage and controllable load management can also improve the system efficiency. Our results illustrate the importance of market designs that provide participants with the correct economic incentives and signaling mechanisms.