How market power affects the behavior of a pumped storage hydro unit in the day-ahead electricity market?

Abstract

The integration of large amounts of wind energy in power systems raises important operation issues such as the balance between power demand and generation. The pumped storage hydro (PSH) units are seen as one solution for this issue, avoiding the need for wind power curtailments. However, the behavior of a PSH unit might differ considerably when it operates in a liberalized market with some degree of market power. In this regard, a new approach for the optimal daily scheduling of a PSH unit in the day-ahead electricity market was developed and presented in this paper, in which the market power is modeled by a residual inverse demand function with a variable elasticity. The results obtained show that increasing degrees of market power of the PSH unit correspond to decreasing levels of storage and, therefore, the capacity to integrate wind power is considerably reduced under these circumstances.Index Terms--Day-ahead electricity market, market power, price-maker, pumped storage hydro unit, wind integration.

Economic assessment of a price-maker energy storage facility in the Alberta electricity market

“…The selfscheduling of a price-maker PHS is developed in Refs. [18,19]. In these papers, the impact on price is modeled by residual demand curve, which is defined by an approximated sigmoid function.…”

“…Moreover, compared to the non-linear model presented in Refs. [6,18,19], a mixed-integer linear programming approach is developed in this study, the global optimality of which is guaranteed. Compared to [20], instead of using one representative supply curve for all hours in the Alberta electricity market, the hourly supply curves of this market for years 2010e2014 are extracted and used to investigate the economic feasibility of energy storage systems in this market during recent years.…”

“…Compared to the model presented in Refs. [18,19], instead of using an approximated function to model the residual demand curves, the GPQCs and DPQCs are constructed using actual hourly supply curves. Moreover, compared to the non-linear model presented in Refs.…”

“…[17]. The profitability of energy arbitrage for a price-maker energy storage in the PJM [6], the Iberian Electricity Market [18,19] and the Alberta electricity market [20] is investigated. In Ref.…”

Impact of strategic behavior and ownership of Energy Storage on provision of flexibility

“…The objective function (7) maximizes social welfare subject to the power balance at each node (8). Constraints (9) and (10) limit the power discharge and charge rate to the bids and offers of the ESS.…”