Bilateral Contracts between NGPPs and Renewable Plants Can Increase Penetration of Renewables

Nayara Aguiar, Vijay Gupta, Pramod P. Khargonekar, Indraneel Chakraborty

Research output: Chapter in Book/Report/Conference proceedingConference contribution

3 Scopus citations

Abstract

As the renewable penetration in the grid increases, the grid-takes-all-renewable paradigm will no longer be sustainable. We consider a day-ahead (DA) electricity market composed of a renewable generator, a natural gas power plant (NGPP) and a coal power plant (CPP). Each player provides the Independent System Operator (ISO) with their commitment and their asking price. The ISO schedules the generators using a least-cost strategy. Because of the intrinsic uncertainty of the renewable generation, the renewable player might be unable to meet its DA commitment. In the event of a shortfall, the renewable generator incurs a penalty so that the non-renewable sources are not forced to consume the cost of renewable intermittence. It has been recognized that such a penalty can lead to conservative bidding by the renewable generator, which may lead to lower than desired penetration of renewable energy in the grid. We formulate and analyze a contract between the renewable producer and the NGPP so that the NGPP reserves some amount of natural gas to hedge the renewable producer against shortfalls. Expressions for the optimal commitments of the players and for the optimal reserve contract are derived. When a reserve contract is established, we observe an increase both in the average profit of the players involved and in the renewable participation in the market. Thus, we show that a Pareto-optimal contract between market players can improve renewable penetration.

Original languageEnglish (US)
Title of host publication2018 Annual American Control Conference, ACC 2018
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages6176-6181
Number of pages6
ISBN (Print)9781538654286
DOIs
StatePublished - Aug 9 2018
Event2018 Annual American Control Conference, ACC 2018 - Milwauke, United States
Duration: Jun 27 2018Jun 29 2018

Publication series

NameProceedings of the American Control Conference
Volume2018-June
ISSN (Print)0743-1619

Other

Other2018 Annual American Control Conference, ACC 2018
CountryUnited States
CityMilwauke
Period6/27/186/29/18

ASJC Scopus subject areas

  • Electrical and Electronic Engineering

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