Spinning reserve pricing under partially deregulated structure considering demand and generating units uncertainty

Spinning reserve for maintaining system reliability under vertically integrated structure can be determined based on deterministic criterion. In the new electric utility environment, generation, transmission, and distribution might be fully or partially unbundled, and some customers are allowed to choose their suppliers. Consequently, the traditional approaches to operate a power system such as providing spinning reserve needs some modifications. In this paper, a reserve pricing mechanism under partially deregulated structure by considering system uncertainty and bilateral transactions is proposed. The considered system uncertainties are demand uncertainty and generating unit availability. Demand uncertainty which is modelled by three load levels is handled by using decision analysis method. Meanwhile unit uncertainty which is represented by two-state Markov model is considered by including risk cost to the total cost. The minimum spinning reserve price can be determined by balancing the increase of unit cost of the original system due to the increase of reserve provided to the BC firm demand and the obtained benefit from the reserve revenue. The proposed method has been tested with a modified IEEE-24 bus system.