Locational allocation and pricing of responsive contingency reserves

In this paper we propose a robust method to determine, allocate and price the contingency reserves required to fully comply with N-1 security criteria in real-time operations. Unlike the traditional fixed reserve requirement, the method identifies adequate reserves in terms of type, quantity and location, needed to respond to expected generation outages. The provision of energy and responsive reserves is co-optimized in a two-stage Security Constrained Unit Commitment/Network Constrained Economic Dispatch, and can be readily implemented within the framework of current scheduling and two-settlement processes carried out in RTO/ISO-managed markets. A numerical example is provided to illustrate the application of the method. Locational allocation and pricing of responsive reserves can improve security of system operations and achieve more efficient dispatch costs.