How do demand response and electrical energy storage affect (the need for) a capacity market

To ensure security of supply and incentivize reliable investment in generation capacity, capacity markets (CMs) have been implemented or are being considered. However, demand response (DR) and electrical energy storage (EES) also contribute to system adequacy. In this paper, we analyse the change in the need for a CM if DR and EES are available, in the presence of a growing portfolio share of intermittent renewable energy sources electricity (RES-E). We present a novel hybrid electricity market model of the transition to a low-carbon electricity system which uses optimization for short-term market operations and agent-based simulation of long-term decisions.

[1]  Daniel S. Kirschen,et al.  Generation Investment Evaluation Model in Electricity Market with Capacity Mechanisms , 2014 .

[2]  Vincent W. S. Wong,et al.  Autonomous Demand-Side Management Based on Game-Theoretic Energy Consumption Scheduling for the Future Smart Grid , 2010, IEEE Transactions on Smart Grid.

[3]  Carlos Batlle,et al.  Security of electricity supply at the generation level: Problem analysis , 2012 .

[4]  C. Fitzpatrick,et al.  Demand side management of industrial electricity consumption: Promoting the use of renewable energy through real-time pricing , 2014 .

[5]  Pradyumna C. Bhagwat.  Security of supply during the energy transition: The role of capacity mechanisms , 2016 .

[6]  Hans Christian Gils,et al.  Assessment of the theoretical demand response potential in Europe , 2014 .

[7]  Pedro Linares,et al.  Towards a comprehensive policy for electricity from renewable energy: Designing for social welfare , 2017 .

[8]  T. Traber.  Capacity Remuneration Mechanisms for Reliability in the Integrated European Electricity Market: Effects on Welfare and Distribution through 2023 , 2017 .

[9]  Sayyad Nojavan,et al.  Energy storage system and demand response program effects on stochastic energy procurement of large consumers considering renewable generation , 2016 .

[10]  Ross Baldick,et al.  A strategic review of electricity systems models , 2010 .

[11]  Sanna Syri,et al.  Electrical energy storage systems: A comparative life cycle cost analysis , 2015 .

[12]  S. M. Shahidehpour,et al.  Effects of ramp-rate limits on unit commitment and economic dispatch , 1993 .

[13]  L. D. Vries,et al.  Generation adequacy: Helping the market do its job , 2007 .

[14]  Michael E. Webber,et al.  A dynamic model-based estimate of the value of a vanadium redox flow battery for frequency regulation in Texas , 2014 .

[15]  Emile J.L. Chappin,et al.  Cross-border electricity market effects due to price caps in an emission trading system: An agent-based approach , 2014 .

[16]  Paul Denholm,et al.  Decarbonizing the electric sector: Combining renewable and nuclear energy using thermal storage , 2012 .

[17]  William D'haeseleer,et al.  Integrated modeling of active demand response with electric heating systems coupled to thermal energy storage systems , 2015 .

[18]  The NOME law: implications for the French electricity market , 2013 .

[19]  Marie Petitet,et al.  Capacity adequacy in power markets facing energy transition: A comparison of scarcity pricing and capacity mechanism , 2017 .

[20]  J. Apt,et al.  Economics of electric energy storage for energy arbitrage and regulation in New York , 2007 .

[21]  Carlos Batlle,et al.  National capacity mechanisms in the European internal energy market: Opening the doors to neighbours , 2015 .

[22]  Emile J.L. Chappin,et al.  Adjusting the CO2 cap to subsidised RES generation: Can CO2 prices be decoupled from renewable policy? , 2015 .

[23]  I. Nikolic,et al.  New Methods for Analysis of Systems-of-Systems and Policy: The Power of Systems Theory,Crowd Sourcing and Data Management , 2012 .

[24]  Emile J.L. Chappin,et al.  Cross-border effects of capacity mechanisms in interconnected power systems , 2017 .

[25]  Jörn C. Richstein,et al.  The market (in-)stability reserve for EU carbon emission trading: Why it might fail and how to improve it , 2015 .

[26]  Rodica Loisel,et al.  Power system flexibility with electricity storage technologies: A technical–economic assessment of a large-scale storage facility , 2012 .

[27]  K. Lackner,et al.  Agent-based model for electricity consumption and storage to evaluate economic viability of tariff arbitrage for residential sector demand response , 2014 .

[28]  T. Genc,et al.  Measuring Demand Responses to Wholesale Electricity Prices Using Market Power Indices , 2016 .

[29]  William D'haeseleer,et al.  Impact of renewables deployment on the CO2 price and the CO2 emissions in the European electricity sector , 2013 .

[30]  Olga Gore,et al.  Cross-border effects of capacity mechanisms: Do uncoordinated market design changes contradict the goals of the European market integration? , 2015 .

[31]  Dominique Finon,et al.  Generation capacity adequacy in interdependent electricity markets , 2011 .

[32]  Sonja Wogrin,et al.  A New Approach to Model Load Levels in Electric Power Systems With High Renewable Penetration , 2014, IEEE Transactions on Power Systems.

[33]  J. Pang,et al.  Oligopolistic Competition in Power Networks: A Conjectured Supply Function Approach , 2002, IEEE Power Engineering Review.

[34]  P. Denholm,et al.  Estimating the value of electricity storage in PJM: Arbitrage and some welfare effects , 2009 .

[35]  Ozan Erdinc,et al.  Economic impacts of small-scale own generating and storage units, and electric vehicles under different demand response strategies for smart households , 2014 .

[36]  M. P. Moghaddam,et al.  Demand response modeling considering Interruptible/Curtailable loads and capacity market programs , 2010 .

[37]  Dogan Keles,et al.  Analysis of design options for the electricity market: The German case , 2016 .

[38]  Marilyn A Brown.  Market failures and barriers as a basis for clean energy policies , 2001 .

[39]  R. Hakvoort,et al.  Managing electric flexibility from Distributed Energy Resources: A review of incentives for market design , 2016 .

[40]  Emile J.L. Chappin,et al.  The effectiveness of a strategic reserve in the presence of a high portfolio share of renewable energy sources , 2016 .

[41]  Brian Ó Gallachóir,et al.  The impact of sub-hourly modelling in power systems with significant levels of renewable generation , 2014 .

[42]  I. Pérez-Arriaga,et al.  A Market Approach to Long-Term Security of Supply , 2002, IEEE Power Engineering Review.

[43]  R. Walawalkar,et al.  Evolution and current status of demand response (DR) in electricity markets: Insights from PJM and NYISO , 2010 .

[44]  J. Torriti,et al.  Demand response experience in Europe: Policies, programmes and implementation , 2010 .

[45]  Kyle Bradbury,et al.  Economic viability of energy storage systems based on price arbitrage potential in real-time U.S. electricity markets , 2014 .

[46]  A. Arabali,et al.  Cost analysis of a power system using probabilistic optimal power flow with energy storage integration and wind generation , 2013 .

[47]  M. D. Nooij,et al.  The value of supply security The cost of power interruptions: Economic input for damage reduction and investment in networks , 2007 .

[48]  Emile J.L. Chappin,et al.  Agent-based models for policy makers , 2012 .

[49]  Florian Steinke,et al.  Grid vs. storage in a 100% renewable Europe , 2013 .

[50]  Adam Hawkes,et al.  Energy systems modeling for twenty-first century energy challenges , 2014 .

[51]  D. Kirschen,et al.  Quantifying the Effect of Demand Response on Electricity Markets , 2007, IEEE Transactions on Power Systems.

[52]  Dacheng Li,et al.  Load shifting of nuclear power plants using cryogenic energy storage technology , 2014 .

[53]  R. Belmans,et al.  Electricity markets for energy, flexibility and availability — Impact of capacity mechanisms on the remuneration of generation technologies , 2017 .

[54]  Mohammed H. Albadi,et al.  A summary of demand response in electricity markets , 2008 .

[55]  Jörn C. Richstein,et al.  The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources , 2017 .

[56]  Jörn C. Richstein.  Interactions between carbon and power markets in transition , 2015 .

[57]  Sayyad Nojavan,et al.  A stochastic self-scheduling program for compressed air energy storage (CAES) of renewable energy sources (RESs) based on a demand response mechanism , 2016 .

[58]  P. Warren.  A review of demand-side management policy in the UK , 2014 .

[59]  M. Sandiford,et al.  Estimating the value of electricity storage in an energy-only wholesale market , 2015 .

[60]  Pierluigi Siano,et al.  Demand response and smart grids—A survey , 2014 .

[61]  Esfandyar Mazhari,et al.  Integrated analysis of high-penetration PV and PHEV with energy storage and demand response , 2013 .

[62]  José Pablo Chaves-Ávila,et al.  Demand response in liberalized electricity markets: Analysis of aggregated load participation in the German balancing mechanism , 2014 .

[63]  M. Ventosa,et al.  Electricity market modeling trends , 2005 .

[64]  Chi-Keung Woo,et al.  Electricity market reform failures: UK, Norway, Alberta and California , 2003 .

[65]  Stefan Spinler,et al.  Capacity market design options: A dynamic capacity investment model and a GB case study , 2016, Eur. J. Oper. Res..

[66]  Steven Stoft,et al.  Market power in California electricity markets , 1995 .

[67]  Kathleen L. Spees,et al.  Capacity Markets - Lessons Learned from the First Decade , 2013 .

[68]  Yves Smeers,et al.  Generation Capacity Expansion in a Risky Environment: A Stochastic Equilibrium Analysis , 2011, Oper. Res..

[69]  B. Mathiesen,et al.  Practical operation strategies for pumped hydroelectric energy storage (PHES) utilising electricity price arbitrage , 2011 .

[70]  Carlos Batlle,et al.  A critical assessment of the different approaches aimed to secure electricity generation supply , 2010 .

[71]  André Faaij,et al.  Bio-energy in Europe: changing technology choices , 2006 .

[72]  W. Arthur,et al.  Out-of-equilibrium economics and agent-based modeling , 2006 .

[73]  H. Simon,et al.  Rationality in Psychology and Economics , 1986 .

[74]  Grigorios L. Kyriakopoulos,et al.  Electrical energy storage systems in electricity generation: Energy policies, innovative technologies, and regulatory regimes , 2016 .

[75]  A model-based analysis on the impact of explicit penalty schemes in capacity mechanisms , 2016 .

[76]  Timothy M. Weis,et al.  The utility of energy storage to improve the economics of wind–diesel power plants in Canada , 2008 .

[77]  P. Cappers,et al.  Demand Response in U.S. Electricity Markets: Empirical Evidence , 2010 .

[78]  M. Genoese,et al.  The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany , 2008 .

[79]  I. Vassileva,et al.  Introducing a demand-based electricity distribution tariff in the residential sector: Demand response and customer perception , 2011 .