Power Markets and Pricing
Enabling the integration of high amounts of renewable generation to supply an increasing demand is not purely a technical challenge. Electricity markets provide the framework within which the level of financial compensation is determined for the provision of energy as well as ancillary services. Depending on the market rules, a market can encourage or discourage investors to invest in new technologies.
Hence, it is crucial to study and understand the impact of specific market rules on investment decisions and how they affect the ability of different technologies to provide services to the grid. With the trend towards low(er) inertia systems, it might even become necessary to establish new market products to counter the increasingly faster dynamics.
At the edges of the system, i.e. for the consumer, the economic considerations are dominated not necessarily by the market, unless local markets exist, but by how consumption is priced. Pricing schemes can offer incentives to consumers to shift major consumption, e.g. the charging of electric vehicles, to times at which the stress on the system is low, thereby avoiding the need for grid expansions. The questions of market design and pricing are another focus in the Power Systems Laboratory.
The increase in the share of Electric Vehicles poses an important challenge to the operation of the electric power grid. The increased load caused by the charging of these EVs creates new challenges in the distribution network, such as higher peak loads, increased instances of voltage drops etc. With the help of the industry partner EKZ, this project aims to help facilitate the integration of large shares of EVs by developing solutions to control the charging of EVs and lowering the potential grid expansion costs. All the developed models will be tested on the Zürich grid using the data provided by EKZ.
Some of the focus areas of this project include:
• Modelling flexible loads - Creating realistic models for flexible loads such as Electric Vehicles, Electric Water heaters, Heat Pump Units, Boilers etc.
• Load shifting solutions - Optimal design of dynamic tariffs such as Time-of-Use tariffs to reduce the network overloading and grid expansion costs.
• Distribution grid expansion model - Design of a distribution grid expansion planning model that takes into account potential load and generation scenarios along with different tariff/control scenarios.
Contact: Ashwin Venkatraman
This research area investigates short-term price formation in the energy market and long-term resource adequacy in decarbonized power systems. In liberalized electricity sectors moving away from vertically-integrated utilities and central planning, short-term price signals are critical for achieving an optimal mix of resources in the long-run. The long-run resource mix is also determined by what other markets or mechanisms exist to manage risk beyond the energy market.
Currently, solving a full-scale model of the power grid that preserves all the physics of power flow and generator characteristics at small time resolutions is still not tractable for dispatch and market-clearing algorithms. However, the approximations we choose and how we handle uncertainty and non-convexity have significant impacts on the social surplus achieved – and who benefits – in competitive markets. We examine how different non-convex pricing schemes compare in long-run market equilibria, providing insight into the benefits and drawbacks of how different system operators clear the market.
Another aspect of market design that varies across regions and is the subject of much debate is resource adequacy. Resource adequacy becomes more challenging to quantify with increased shares of stochastic variable renewable resources. Additionally, more research is needed to understand the tradeoff between centralized and decentralized approaches to ensure that we have the optimal mix of resources in the long-run to provide reliable power at least cost. As capacity mechanisms grow in number and are increasingly scrutinized for their merits given the cost, a current project examines the theoretical motivation for hybrid market designs in the context of increasing renewables, expanded demand-side participation, and long-term risk.
Contact: Conleigh Byers
The growing shares of renewable production in power systems have led to decreased levels of system inertia, which impacts system stability and increases the need for fast-responding frequency control services. In this context, the type of ancillary services and how they are being compensated likely needs to be adjusted from the current practice.
In this project, we would like to tackle the following questions: what types of services are needed in a highly decentralized system with large shares of renewable resources? How to facilitate the participation of ancillary services providers in wholesale markets and empower them to offer their full flexibility? And, in a fully renewable power system with a negligible fuel cost component, how should these services be remunerated in order to reflect the cost of variability and uncertainty?
This project will add the missing link of the design of ancillary service product and market trading floors, and the pricing of such.
In particular, we will first develop a frequency control-aware inertia commitment model which anticipates the impact of system inertia levels on primary frequency control (PFC) markets using hierarchical optimization. In this inertia-dependent PFC market formulation, the requirements and quality of different PFC services will be modelled as inertia-dependent functions.
This work will open the way to investigate the value and pricing of inertia and build demand curves for inertia and other fast-responding frequency-control services which reflect the cost of variability and uncertainty in real time.
In parallel, we will investigate how different providers, such as active distribution grids, can optimally participate in ancillary services and energy markets using hierarchical optimization and reinforcement learning methods.
This work will open the way to design new ancillary services products and bid formats which accurately represent the full flexibility of these providers and facilitates their participation in wholesale markets.
This project is part of the NCCR Automation:
external page https://nccr-automation.ch/nccr-automation
Contact: Dr. Lesia Mitridati