Risk-Based Reserve Procurement

Operating reserves are needed to accommodate the vagaries generated by stochastic resources such as the ever-increasing shares of variable renewable energy (VRE). Increasing the amounts of reserve to accommodate the increased stochasticity needs to be carefully justified since this resource comes at a cost. Therefore, reserve procurement needs to be determined considering both, the benefits in terms of reliability improvements and the increased operating costs to the system. Traditionally the procurement of this service has relied on deterministic rules-of-thumb, while academic research has demonstrated the advantages of modeling the variability and uncertainty endogenously in the decision-making process through advanced scheduling methods. Those approaches do not explicitly model the risk (or its components) in the decision-making process. This work proposes practical methods to determine the reserve requirements to maintain risk (or risk component) below a desired threshold during system operation. Numerical results on the RTS-GMLC system demonstrate the effectiveness of the proposed methods.