Transactive Uncertainty and Flexibility for High Penetration of Semi-dispatchable Renewables in Electricity Markets

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The increasing penetration of variable energy resources (VER), such as solar and wind generation, is challenging traditional power system operations and electricity market mechanisms. Due to its intrinsic intermittency and variability, VER generation leads to increased uncertainty in the power grid. The uncertainty inherent in VERs must be accommodated by available flexibilities, such as energy storage, demand management, and generators that can offer large rates of increase or reduction of generation. Existing methods for managing uncertainty often passively offer heuristic incentives to these sources of flexibility. However, the available flexibility in the electric power system is limited. As VER penetration increases significantly, system operators often heuristically curtail more renewables, and system security can be jeopardized due to flexibility scarcity. Thus, it becomes crucial to optimize the flexibility demanded by the uncertain sources. The research project will explore an active uncertainty management mechanism in the electricity market with a novel concept, transactive flexibility and uncertainty. Flexibility will be treated like a commodity, which can be bought and sold in the market, to completely address the issue of deficiency in a cost-effective way. Due to its scale and complexity, it is very challenging to solve the associated optimization problem considering the uncertainties from VERs in real-world systems. This project will develop fast scheduling tools to meet the timeliness requirement in real electricity markets. Also, the project results will contribute to development of a new course to be taught by the Principal Investigator.The aim of this project is to develop a theoretically sound yet practical market clearing model and scheduling tool for power grids with high penetration of semi-dispatchable renewables. Active uncertainty management will position the flexibility optimally, proactively and cost efficiently. Clear and fair incentives will be provided to both uncertainty mitigators and uncertainty sources based on a unified uncertainty marginal price, which varies with location and time. The research project has three cohesive parts: (1) developing a new electricity market model with transactive uncertainty and flexibility satisfying a cost-causation principle; (2) designing novel solution approaches for day-ahead and real-time electricity markets with provable computational performance through exploiting the special structure of the power grid; (3) validating, demonstrating, and promoting the proposed models and computational methods in real-world power systems. The successful completion of this project will potentially address the fundamental challenge of uncertainty management in electric power systems. The systematic framework of the project is expected to increase social welfare, allow for deeper VER penetration, enhance the security and reliability of the power grid, and improve market fairness.