Economic Risk Analysis for the Power System: From a Quality of Service Perspective

Global warming is warranting significant penetration of renewable energy into the power grid. However, these renewable energy resources pose major challenges to the reliable power system operation due to their stochastic outputs. To this end, various new components emerge to provide the urgently needed flexibility to the grid. Such new components include storage systems, distributed generations, which are also referred to as the negative loads; we regard all these new components the dispatchable load. Specifically, since the costs for these dispatchable loads to respond to load shedding requests are different, we regard such costs as the quality of services requirements of the dispatchable loads, and we are interested in how to identify the market power in a market with heterogeneous dispatchable loads. We construct functional measures to understand the influence of different parameters on market power. We further exemplify the theoretical understanding with numerical studies on IEEE 39-bus system.