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A locational marginal price for frequency balancing operations in regulation markets

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  • Brooks, Adria E.
  • Lesieutre, Bernard C.

Abstract

The integration of increasingly more renewable energy resources on the electric grid requires consideration of market design for balancing power intermittency. We propose a new locational marginal price for the frequency regulating reserves currently utilized by system operators to balance random power fluctuations on electric grids. Like the widely used wholesale energy price, our proposed price considers the locational effects of delivering electricity services across a congested transmission system. We further propose a regulation market settlement policy which requires market participants with variable power injections to pay based on their frequency regulation needs instead of their energy needs. The calculation of the proposed price and market design is demonstrated using a test case. The results of the test case are further generalized to larger systems. We find the proposed price is more efficient than current regulation market clearing prices and better aligns regulation market design with the wholesale energy market. The limitations and market implications of this proposal are discussed.

Suggested Citation

  • Brooks, Adria E. & Lesieutre, Bernard C., 2022. "A locational marginal price for frequency balancing operations in regulation markets," Applied Energy, Elsevier, vol. 308(C).
    • Handle: RePEc:eee:appene:v:308:y:2022:i:c:s0306261921015646
    DOI: 10.1016/j.apenergy.2021.118306
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    References listed on IDEAS

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    1. Paria Akbary & Mohammad Ghiasi & Mohammad Reza Rezaie Pourkheranjani & Hamidreza Alipour & Noradin Ghadimi, 2019. "Extracting Appropriate Nodal Marginal Prices for All Types of Committed Reserve," Computational Economics, Springer;Society for Computational Economics, vol. 53(1), pages 1-26, January.
    2. Liu, Haifeng & Tesfatsion, Leigh S. & Chowdhury, A.A., 2009. "Locational Marginal Pricing Basics for Restructured Wholesale Power Markets," Staff General Research Papers Archive 13072, Iowa State University, Department of Economics.
    3. Morales, Juan M. & Zugno, Marco & Pineda, Salvador & Pinson, Pierre, 2014. "Electricity market clearing with improved scheduling of stochastic production," European Journal of Operational Research, Elsevier, vol. 235(3), pages 765-774.
    4. Fernandez, E. & Albizu, I. & Bedialauneta, M.T. & Mazon, A.J. & Leite, P.T., 2016. "Review of dynamic line rating systems for wind power integration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 80-92.
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    Cited by:

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    3. Cao, Yujie & Cao, Fang & Wang, Yajing & Wang, Jianxiao & Wu, Lei & Ding, Zhaohao, 2024. "Managing data center cluster as non-wire alternative: A case in balancing market," Applied Energy, Elsevier, vol. 360(C).

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