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The effects of stochastic market clearing on the cost of wind integration: a case of New Zealand electricity market

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Abstract

Introducing wind generation into an electricity market can incur an extra cost resulting from the volatile nature of wind. To reduce this cost, an alternative stochastic market clearing mechanism is proposed in the literature (Wong and Fuller in IEEE Trans Power Syst 22(2):631–638, 2007; Pritchard et al. in Oper Res 2010; Bouffard et al. in IEEE Trans Power Syst 20(4):1818–1826, 2005). However, implementing a stochastic market clearing can also impose some extra cost on the market. Therefore, it is essential to estimate the efficiency gain resulting from implementing a stochastic market clearing mechanism. We describe the result of an empirical study to quantify value of a stochastic clearing mechanism for the New Zealand electricity market. We extend our analysis for possible larger wind integration in the future.

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Notes

  1. Wind generation can be thought of as decreasing demand. Hence, volatility in wind generation is equivalent to volatility in demand. Therefore our models are effectively general enough to cope with demand volatility as well, although we have not implemented this in our experiments. Our experiments are based on historical periods. During these periods demand was realized and the CDS has measurements of all nodal demands. Through aggregating these we arrive at our demand figures for the simplified NZ model.

  2. Schedule, Price and Dispatch.

  3. This approximation also ensures that our model is compatible with the original SPD formulation.

  4. Effectively, demand must always be satisfied.

  5. These days are chosen because they can provide a variety of results.

  6. Another option is to compare these two mechanism based on the expected cost of generation (see [15]). Our cost comparison, however, is based directly on actual wind generation rather than the constructed scenarios we have used for the model. Having run the numerical experiments for 6 months does make the overall result much like an expected value; it could be argued that this is actually better than computing expected values with respect to the small number of scenarios used in the stochastic program.

References

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Correspondence to Javad Khazaei.

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The authors would like to thank the reviewers for their careful evaluation of the paper and for their helpful comments.

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Khazaei, J., Zakeri, G. & Pritchard, G. The effects of stochastic market clearing on the cost of wind integration: a case of New Zealand electricity market. Energy Syst 5, 657–675 (2014). https://doi.org/10.1007/s12667-014-0120-x

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  • DOI: https://doi.org/10.1007/s12667-014-0120-x

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