A Generation Reserve Optimization Model Incorporating Demand Market Participation

Utilities must ensure that they have adequate generator reserves to allow for possible plant outages and electricity demand forecast errors. If an excess of plant is committed, then this will result in unnecessary fuel usage. This will result in an increased cost of producing electricity. On the other hand, if too little plant is committed then expensive quick start plants such as gas turbines may be required to run. At worst customers load may be shed. The need for generation reserve optimization therefore exists. Some utilities schedule their reserve to cater for the loss of the largest generating plant or set their reserve to a fixed percentage of the maximum expected peak load. These techniques do not take into consideration the probability of losing the largest unit or the units that provide the reserve. In South Africa, demand market participation was introduced as an incentive for customers to provide energy to the utility when the cost of producing energy is high. This paper presents a generation reserve optimization model that uses the reliability cost-worth method to determine the optimal operating reserve. The market compromises of generator reserve, demand market participation and interruptible load (IL) provided by the customer.