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DOE OSTI2024

Research Priorities and Opportunities in U.S. Wholesale Electricity Markets: Market Design under Deep Decarbonization

This report provides a comprehensive review of challenges, research needs, and potential solutions for competitive wholesale electricity market design in deeply decarbonized power systems. We provide context regarding how competitive wholesale electricity markets can evolve in a longer-term perspective to ensure that they still operate efficiently throughout the transition to a deeply decarbonized future. We organize the discussion across seven topics: operational reliability, emerging technology integration, adequacy and resilience, price formation, interactions across transmission and distribution systems, transmission planning, achieving clean energy objectives, and challenges associated with cost-effectively achieving clean energy objectives. In each section we first identify key associated challenges before proposing a set of corresponding solutions and research needs.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2024

Research Priorities and Opportunities in U.S. Wholesale Electricity Markets: Market Design under Deep Decarbonization

This report contributes to the body of literature by reviewing key challenges for competitive wholesale electricity market design in deeply decarbonized power systems and establishing potential solutions and associated research needs. We provide a long-term perspective on ways in which competitive wholesale electricity markets can evolve to ensure that they still operate efficiently throughout the transition to a deeply decarbonized future. In this report, we use the term “deep decarbonization” to refer broadly to systems that generate nearly all their electricity from zero-carbon or carbon-neutral resources, while recognizing that there are many potential configurations of such systems. We also stress that many of these issues will arise to varying degrees as systems move toward full decarbonization, even if they are not truly 100% carbon-free.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2024

Techno-economic assessment of electricity market potential for co-located hydro-floating PV systems

Abstract—Harnessing renewable energy from diverse sources is paramount for sustainable power systems. Recently, co-located floating PV (FPV) systems present an intriguing prospect in this context. These hybrid systems, blending hydro and solar power, may offer a more consistent electricity output and potential economic advantages. Yet, assessing their actual potential requires a comprehensive techno-economic assessment. In addition, probabilistic price forecasting has recently gained attention in electricity market because decisions based on such predictions can yield significantly higher profits than those made with point forecasts alone. To this end, this paper embarks on a journey to elucidate the electricity market potential of co-located hydro-FPV systems in a probabilistic fashion to investigate the technological merits and economic viability of co-located hydro-FPV under different market structures. Our preliminary findings suggest that LCOE and payback metrics are sensitive not only to different markets but also to different solar incentives. Concurrently, we also observe that the payback period is generally faster with a production tax credit (PTC) than an investment tax credit (ITC). This assessment serves as a cornerstone for understanding the future prospects of co-located hydro-FPV systems in modern electricity markets.

13 HYDRO ENERGY↗
DOE OSTI2022

Security-Constrained Unit Commitment for Electricity Market: Modeling, Solution Methods, and Future Challenges

This paper summarizes the technical activities of the IEEE Task Force on Solving Large Scale Optimization Problems in Electricity Market and Power System Applications. This Task Force was established by the IEEE Technology and Innovation Subcommittee to first review the state-of-the-art of the security-constrained unit commitment (SCUC) business model, its mathematical formulation, and solution techniques in solving electricity market clearing problems. The Task Force then investigated the emerging challenges of future market clearing problems and presented efforts in building benchmark mathematical and business models.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2021

Transactive Implementation of Decentralized Electricity Market for Grid-Edge Systems

The electricity landscape is evolving towards more decentralized approaches due to the proliferation of distributed energy resources and the participation of increasingly smart consumers and producers (prosumers). Recent advances in information and communication technologies and smart metering, provides strategic opportunities for “prosumers” to reform their conventional energy practices towards more consumer-centric economies. From an operational perspective, managing power distribution networks is becoming more difficult with such active grid-edge systems providing limited to no visibility or control. Transactive Energy (TE) has been emerging as a key enabler towards effectively and efficiently integrating prosumers into competitive electricity markets. This work presents a transactive implementation of community-centric markets. A co-simulation framework is developed for evaluating the proposed market structure with high-fidelity models. Case studies on the IEEE-123 node test system demonstrate that community-centric transactive markets can enable communities of prosumers to operate collaboratively as grid-edge systems. The potential benefits of implementing community-centric TE systems are also illustrated.

transactive, microgrids, centralized market operat↗
DOE OSTI2023

Mitigation-Aware Bidding Strategies in Electricity Markets

Market power exercise in the electricity markets distorts market prices and diminishes social welfare. Many markets have implemented market power mitigation processes to eliminate the impact of such behavior. The design of mitigation mechanisms has a direct influence on investors' profitability and thus mid-/long-term resource adequacy. In order to evaluate the effectiveness of the existing market power mitigation mechanisms, this paper proposes a mitigation-aware strategic bidding model and studies the bidding strategies of the market participants under current practice. The proposed bidding model has a bilevel structure with strategic participant's profit maximization problem in the upper level and the dispatch problem for market operators in the lower level. In particular, the consideration of potential offer mitigation is incorporated as upper-level constraints based on the conduct and impact tests. This bilevel problem is reduced to a single-level mixed-integer linear program using the KKT optimality conditions, duality theory, and linearization. Numerical results illustrate how a strategic player can exercise market power to achieve a higher profit even under the current market power mitigation process and we analyze the social impact that the market power exercise results.

Wu, Yiqian↗
DOE OSTI2021

HIPPO – A Software Platform for Electricity Market Research and Development

The goal of this project is to provide Regional transmission organizations (RTOs) and independent system operators (ISOs) a market design and prototyping software, High-Performance Power-Grid Optimization (HIPPO), that they can evaluate electricity market design options, calculate market planning strategies and operational performance. With the high standards and strict reliability requirements for operating power systems, impacts of new technologies need to be fully investigated prior to any consideration for adoption. A market design and prototyping software tool which can be used to prototype electricity market design options, to calculate market planning strategies and operational performance with high precision, and to investigate the impacts for integrating future power grid technologies will be valuable to RTOs/ISOs who operate power systems, to vendors like GE and ABB who provide the market solvers, and to market participants and researchers who are actively doing market research. HIPPO is a such tool that can be used to improve the current market operations and provide capabilities for rigorous forward-looking design and prototyping of next-generation energy markets. HIPPO has a high-resolution model for the day-ahead SCUC, which was validated with MISO and GE-Grid Solutions. HIPPO is built with parallel and distributed computing capabilities and can be executed in both multi-thread and high-performance computing (HPC) settings. This capability provides fast solution speed necessary to handle the larger and more complex SCUC problems of real-world cases and the potentially growing size and complexity of future scenarios. In addition, HIPPO has a concurrent optimizer (CO) which manages multiple algorithm executions simultaneously and leverages the advantages from different algorithms. This structure provides flexibility to better benchmark competing approaches. Highly accurate market model, fast solution technologies and flexible model and algorithm control are the features which will make HIPPO an extensible platform for developing and testing multiple approaches to meet a wide range of future market needs.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2022

Incorporate day-ahead robustness and real-time incentives for electricity market design

In this paper, we propose a two-stage electricity market framework to explore the participation of distributed energy resources (DERs) in a day-ahead (DA) market and a real-time (RT) market. The objective is to determine the optimal bidding strategies of the aggregated DERs in the DA market and generate online incentive signals for DER-owners to optimize the social-welfare taking into account network operational constraints. Distributionally robust optimization is used to explicitly incorporate data-based statistical information of renewable forecasts into the supply/demand decisions in the DA market. We evaluate the conservativeness of bidding strategies distinguished by different risk aversion settings. In the RT market, a bi-level time-varying optimization problem is proposed to design the online incentive signals to tradeoff the RT imbalance penalty for distribution system operators (DSOs) and the costs of individual DER-owners. This enables tracking their optimal dispatch to provide fast balancing services, in the presence of time-varying network states while satisfying the voltage regulation requirement. Simulation results on both DA wholesale market and RT balancing market demonstrate the necessity of this two-stage design, and its robustness to uncertainties, the performance of convergence, the tracking ability and the feasibility of the resulting network operations.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2021

Modeling and Optimizing Pumped Storage in a Multi-stage Large Scale Electricity Market under Portfolio Evolution

To leverage the fast-ramping capability of resources to provide great value to the grid, electricity system operators such as the Midcontinent Independent System Operator (MISO) continue to evolve their approaches for integrating energy storage resources, including pumpedstorage hydro (PSH), into the electricity markets. However, new challenges arise in modeling and optimizing these energy-limited resources across multiple market clearing processes and planning studies with uncertainties and imperfect information. For instance, current market practices of PSH owners specifying pumping/generating hours can result in sub-optimal generation dispatch. Letting grid operators optimize PSH with the consideration of multiple operating modes and energy limitation constraints can potentially bring economic benefits to both the system and the PSH owners. However, in multi-stage clearing process of electricity markets, utilizing the PSH flexibility to deal with realized uncertainties can cause deviation in the multi-stage scheduling processes. The resulting financial risks from the schedule deviation may not be acceptable to PSH owners. In addition, to effectively utilize this energy limited resource, the state of charge (SOC) constraints of PSH needs to be continuously optimized and the marginal cost of deviation need to reflect the expected cost to purchase or sell energy at future times to compensate for deviations. This project aims to develop a prototype enhanced PSH model and improved price signals in the multi-stage market clearing process with proper consideration of the unique characteristics of PSH, in order to better align underlying PSH capabilities with evolving grid needs, particularly including the needs for more frequent and larger cycling to manage variability and uncertainty from renewables.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2021

Roles of retailers in the peer-to-peer electricity market: A single retailer perspective

Despite extensive research in the past five years and several successfully completed and on-going pilot projects, regulators are still reluctant to implement peer-to-peer trading at a large-scale in today’s electricity market. The reason could partly be attributed to the perceived disadvantage of current market participants like retailers due to their exclusion from market participation - a fundamental property of decentralized peer-to-peer trading. As a consequence, recently, there has been growing pressure from energy service providers in favor of retailers’ participation in peer-to-peer trading. However, the role of retailers in the peer-to peer market is yet to be established as no existing study has challenged this fundamental circumspection of decentralized trading. In this context, this perspective takes the first step to discuss the feasibility of retailers’ involvement in the peer-to-peer market. In doing so, we identify key characteristics of retail-based and peer-to-peer electricity markets and discuss our viewpoint on how to incorporate a single retailer in a peer-to-peer market without compromising the fundamental decision-making characteristics of both markets. Finally, we give an example of a hypothetical business model to demonstrate how a retailer can be a part of a peer-to-peer market with a promise of collective benefits for the participants.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2023

Synthetic Electricity Market Data Generation and HERON Use Case Setup of Advanced Nuclear Reactors Coupled with Thermal Energy Storage Systems

This study evaluates and optimizes advanced nuclear reactors coupled with thermal energy storage (TES) systems in an Integrated Energy System (IES) architecture to enable advanced nuclear power plants (A NPP) to participate in multi-commodity markets, thus enhancing their economic competitiveness. Nuclear-TES coupling scenarios studied herein are designed attenuate the nuclear heat dynamics and defer energy delivery to a later time, enabling the nuclear reactor to continue operating at or near steady-state design conditions as usual while also enabling flexible generation. Three A-NPPs, namely, an advanced light-water reactor (A LWR), a high temperature gas-cooled reactor (HTGR) and a liquid-metal fast reactor (LMFR) were selected as the initial use cases for demonstrating the technoeconomic of thermally balanced energy storage coupling design for thermal power extraction. Each of the reactor technologies were evaluated in two different electricity markets. Stochastic optimization approach was adopted which included the evaluation of price signals from the Pennsylvania-New Jersey-Maryland (PJM) market, and Electric Reliability Council of Texas (ERCOT), using an autoregressive moving average (ARMA) model. Risk Analysis Virtual Environment (RAVEN) tool and its dispatch optimization plugin, the Holistic Energy Resource Optimization Network (HERON), were used to perform dispatch and capacity optimization, using the price data provided by the ARMA models. The results from the Nuclear-TES use cases will be used to design and characterize dynamic integrated system behavior and feedback.

22 GENERAL STUDIES OF NUCLEAR REACTORS↗
DOE OSTI2025

A bilevel multistage stochastic self-scheduling model with indivisibilities for trading in the continuous intraday electricity market

In this paper, we study the profit maximization problem of a virtual power plant trading in the continuous intraday electricity market. Our virtual power plant model is compatible with renewable, and thermal assets, covering a range of virtual power plants currently participating in energy markets. We model the trading problem as a bilevel multistage stochastic program. The upper level of the problem accounts for the profit maximization of the virtual power plant with explicit modeling of the technical constraints of the operational status of the thermal power plant including minimum start-up and shut-down times, ramp-up and ramp-down rates, and minimum generation level. The upper level also decides which continuous and indivisible (fill-or-kill) orders are submitted to the market. The lower-level problem accounts for the clearing of the continuous intraday market, i.e., matching of buy and sell orders. Because of the presence of fill-or-kill orders, the lower-level problem is mixed-integer, which prevents its direct conversion to a single-level problem using duality. In order to solve this challenging problem, we develop a convex-hull extended formulation for the lower-level problem, apply duality theory to obtain a single-level stochastic equivalent formulation, and employ McCormick envelopes to turn the problem into a multistage stochastic mixed-integer linear problem, which we solve using the stochastic dual dynamic integer programming algorithm. We conduct numerical experiments and analyze the optimal trading behavior of a virtual power plant trading in an ideal continuous market without arbitrage.

Bilevel multistage stochastic programming problem↗
DOE OSTI2022

A Hierarchical Local Electricity Market for a DER-rich Grid Edge

We report with increasing penetration of distributed energy resources (DER) in the distribution system, it is critical to design market structures that enable smooth integration of DERs. A hierarchical local electricity market (LEM) structure is proposed in this paper with a secondary market (SM) at the lower level representing secondary feeders and a primary market (PM) at the upper level, representing primary feeders, in order to effectively use DERs to increase grid efficiency and resilience. The lower level SM enforces budget, power balance, and flexibility constraints and accounts for costs related to consumers, such as their disutility, flexibility limits, and commitment reliability, while the upper level PM enforces grid physics constraints such as power balance and capacity limits, and also minimizes line losses. The hierarchical LEM is extensively evaluated using a modified IEEE-123 bus with high DER penetration, with each primary feeder consisting of at least three secondary feeders. Data from a GridLAB-D model is used to emulate realistic power injections and load profiles over the course of 24 hours. The performance of the LEM is illustrated by delineating the family of power-injection profiles across the primary and secondary feeders as well as corresponding local electricity tariffs that vary across the distribution grid. Through numerical simulations, the hierarchical LEM is shown to improve the efficiency of the market in terms of lowering overall costs, including both the distribution-level locational marginal prices (d-LMP) as well as retail tariffs paid by customers. Together, it represents an overall framework for a Distribution System Operator (DSO) who can provide the oversight for the entire LEM.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2022

A hybrid robust-stochastic optimization approach for day-ahead scheduling of cascaded hydroelectric system in restructured electricity market

Uncertainties arising from complicated natural and market environments pose great challenges for the efficient operation of cascaded hydroelectric systems. To overcome these challenges, this paper studies the day-ahead scheduling of cascaded hydroelectric systems in a restructured electricity market with the presence of uncertainties in electricity price and natural water inflow. To properly model the uncertainty, we consider the unique characteristics of these two types of uncertainties and capture them via the uncertainty set and stochastic scenarios, respectively. Further, a hybrid robust-stochastic optimization model is developed to simultaneously hedge against these two types of uncertainties, which is formulated as a large-scale non-convex optimization problem with mixed integer recourse. After introducing linearization of nonlinear terms, a tailored hybrid decomposition scheme combining Lagrangian relaxation and Dantzig-Wolfe decomposition is adopted to achieve efficient computation of the proposed model. Two real-world cases are conducted to demonstrate the capability and characteristics of the proposed model and algorithms.

13 HYDRO ENERGY↗
NASA NTRS2007

[Space Weather Impact on the Electricity Market]

Forbes & St. Cyr (2004, hereafter "FISC") have provided evidence that the electricity market can be impacted by space weather. Our analysis indicated that the estimated market impact for PJM was 3.7 % or approximately $500 million dollars over the 19 month sample period. Kappenman has taken exception to this estimate and contends that we have exaggerated the magnitude of the problem that space weather poses to PJM. There are four specific issues: (1) he claims that we have ignored relevant literature; (2) he asserts that Dst is not an appropriate proxy for GICs in PJM; (3) he charges that our findings are inconsistent with the impact of the 17 September 2000 storm; and (4) he alleges that our discussion of October 2003 storms is misleading. In our article, we have explained our methodology, multivariate regression analysis, with a particular focus on how it compares to correlation analysis. We have also explained the limitations of our analysis. We noted that "...While the Dstlprice relationship was found to be robust, the precise estimate should be treated with a relatively high degree of caution given that econometric modeling is not an exact science as well as the fact that the measure of space weather may be a poor proxy for GICs" (paragraph 96). We have also noted that additional research using local magnetometer data are needed (paragraph 97). We did not claim that that our findings for PJM are representative of the impact of space weather on other power grids. On the contrary, we noted that ... "Only analysis of other power grids will tell. " (paragraph 97). Kappenman inaccurately asserts that we have indicated that our findings . . . "imply much higher total costs are likely across the US and elsewhere in the world." He also inaccurately asserts that we have claimed that " . . . Dst is the most suited proxy for GIC in the PJM grid.. ." Moreover, he inaccurately refers to our analysis as a correlation study that uses Dst as quasi-binary indicator.

SaintCyr, O. Chris↗
DOE OSTI2025

Are better combinations of DERs more profitable?: Combinatorial optimization for aggregation of DERs in wholesale electricity markets

Recently, regulatory changes in various countries have enabled the participation of small-scale distributed energy resources (DERs) aggregated in virtual power plants (VPPs) in wholesale electricity markets. The inherent uncertainty and variability of resources comprising VPPs can lead to imbalances between forecasted and metered outputs, potentially resulting in the deficient settlement of generation under imbalance settlement rules. To address this challenge, it is essential to manage variability in the planning phase and uncertainty in the operation phase. Most current research focuses on managing forecasting errors in the operational phase, with insufficient attention given to the planning phase. Here, to bridge this gap, this paper proposes an optimal combination strategy for DERs to maximize the market participation revenue of VPPs by proactively managing variability in the planning phase. To estimate the expected revenue, we conducted analyses for homogeneous and heterogeneous DERs using Monte Carlo simulations and genetic algorithms. Remarkably, the proposed method demonstrated approximately 8 % higher revenue compared to the neighboring group case when considering diversity in DER set configuration with equal proportions of photovoltaics and wind.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2022

Integrating Hydrogen Production and Electricity Markets: Analytical Insights from California

This report compares the cost of different pathways for producing hydrogen in California. In addition to capturing the current cost of electrolyzers and other equipment, the pathways apply current retail electricity tariff options offered by utilities Southern California Edison (SCE), Pacific Gas & Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E). The analysis also tests the cost of combining hydrogen production with utility-scale wind or solar generation in California. Scenarios examine current costs as well as projections for 2030. The cost benchmark - a relatively low electrolytic hydrogen production cost - is based on the wholesale price of electricity used by a theoretical hydrogen production plant connected directly to the California Independent System Operator (CAISO) transmission system. California law currently prohibits this approach in CAISO, but it is permissible in other organized wholesale electricity markets. The cost for producing hydrogen under 2019 conditions in this theoretical case was approximately $3/kg. Different scenarios are used to examine current costs, e.g., 2019, as well as projections for 2030.

08 HYDROGEN↗
DOE OSTI2023

An Analysis of the Effects of Renewable Energy Intermittency on the 2030 Korean Electricity Market

Republic of Korea has unique geographical characteristics similar to those of an island, resulting in an isolated power system. For this reason, securing sufficient operating reserves for the system’s stability and reliability in the face of the intermittency of increasing variable renewable energy (VRE) is paramount, and this will pave the way to achieving the nation’s decarbonization target and carbon neutrality. However, the current reserve-operation method in Republic of Korea does not take into account energy-system conditions, such as the intermittency of the VRE. Therefore, this paper presents an analysis of the impact of changes in reserve-operation methods on the electricity market in the future Republic of Korean power system, with the increased levels of VRE that are currently envisioned. Specifically, three reserve-operation methods, including Korea’s current reserve-power-operation standards, were applied to the two power-system plans announced by the Korean government to analyze the annual generator operation and costs. The analysis results show that securing reserves proportional to the VRE would exert negative effects, such as increased power-generation costs and the curtailment of nuclear and VRE generation. These results can contribute to the estimation of operational reserves needed for high levels of VRE and to the design of new the Korean reserve market, to be introduced in 2025.

24 POWER TRANSMISSION AND DISTRIBUTION↗