Iterative Mechanism for Two-Sided Electricity Markets with Variable Renewable Energy Sources

Abstract

The objective of this work is to develop an iterative bidding mechanism for wholesale electricity markets with variable renewable energy sources and investigate the performance of the mechanism under various scenarios. Built upon DC optimal power flow model in previous studies, this paper extends the model to two-sided markets with uncertainties in both generation and load. The convergence of the solution to the efficient Nash equilibrium is discussed and improved, which enables further studies on the dynamic behavior of the mechanism under different levels of renewable penetration and different trading schedules (day-ahead or hour-ahead). In addition, this work shows that by adding ramp rate constraint on actual generation powers, the mechanism can embrace higher uncertainties while maintaining grid reliability.