Smart Grid Seminar

Market designs in electric power systems face new challenges in incorporating large-scale renewable energy in-feeds and demand side participation (DSP). In order to enhance power system flexibility and reduce the amount of reserve capacity required two key issues must be addressed: 1) provision of financial incentives for DSP in ancillary service markets, and 2) incentives for intermittent renewables and demand to adhere to their forecasted schedules. In the first part of the talk, I will present ongoing research on cost allocation of load balance-related products, which may be event-driven, i.e. contingency reserves, or non-event driven, i.e. ramping/load-following reserves. The rationale is that holding participants liable for any possible imbalance remediation that the system may have to incur due to the participant's actions will reduce the need for actions to keep permanent system balance. In the second part, I will give a taxonomy of retail market designs for DSP based on economic as well as engineering arguments for and against each option. A market mechanism based on contracts that financially rewards demand units for participation in direct load control seems to be the most promising variant for DSP in ancillary service markets. Therefore, I will present ongoing research on contract design mechanisms and discuss the role of information shared amongst market participants.