Incentive compatible pool-based electricity market design and implementation: A Bayesian mechanism design approach

Zou, Peng; Chen, Qixin; Xia, Qing; He, Chang; Chen, Kang

doi:10.1016/j.apenergy.2015.08.099

Cited by 31 publications

(22 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…For example, Keles et al (2016) study energy and incentives to invest in renewables. Zou et al (2015) examine a mechanism design in the energy market. In contrast to Zou et al (2015), our design is a modified VCG mechanism built up to test the market for different responses, where a SO is part of the bidding process.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

A system operator’s utility function for the frequency response market

et al. 2018

View full text Add to dashboard Cite

How can the electricity system operator determine the optimal quantity and quality of electricity ancillary services (such as frequency response) to procure in a market increasingly characterized by intermittent renewable electricity generation? The paper presents a system operator's utility function to calculate the exchange rates in monetary values between different frequency response products in the electricity system. We then use the utility function in a two-sided Vickrey-Clarke-Groves (VCG) mechanism combined of two frequency response products -enhanced and primary -in the context of the system in Great Britain. This mechanism would allow the market to reveal to the system operator the welfare optimal mix of speed of frequency response and quantity to procure. We show that this mechanism is the efficient way to support new faster sources of frequency response, such as could be provided by grid scale batteries. AbstractHow can the electricity system operator determine the optimal quantity and quality of electricity ancillary services (such as frequency response) to procure in a market increasingly characterized by intermittent renewable electricity generation? The paper presents a system operator's utility function to calculate the exchange rates in monetary values between different frequency response products in the electricity system. We then use the utility function in a two-sided Vickrey-Clarke-Groves (VCG) mechanism combined of two frequency response products -enhanced and primary -in the context of the system in Great Britain. This mechanism would allow the market to reveal to the system operator the welfare optimal mix of speed of frequency response and quantity to procure. We show that this mechanism is the efficient way to support new faster sources of frequency response, such as could be provided by grid scale batteries. ABSTRACTHow can the electricity system operator determine the optimal quantity and quality of electricity ancillary services (such as frequency response) to procure in a market increasingly characterized by intermittent renewable electricity generation? The paper presents a system operator's utility function to calculate the exchange rates in monetary values between different frequency response products in the electricity system. We then use the utility function in a two-sided Vickrey-Clarke-Groves (VCG) mechanism combined of two frequency response products -enhanced and primary -in the context of the system in Great Britain. This mechanism would allow the market to reveal to the system operator the welfare optimal mix of speed of frequency response and quantity to procure. We show that this mechanism is the efficient way to support new faster sources of frequency response, such as could be provided by grid scale batteries.

show abstract

Section: Introductionmentioning

confidence: 99%

“…Zou et al (2015) examine a mechanism design in the energy market. In contrast to Zou et al (2015), our design is a modified VCG mechanism built up to test the market for different responses, where a SO is part of the bidding process. We test the market for the optimal responses.…”

Section: Introductionmentioning

confidence: 99%

A system operator’s utility function for the frequency response market

et al. 2018

View full text Add to dashboard Cite

show abstract

“…Information exchange, incentive compatibility, and market efficiency are the 3 fundamental elements to be considered in market design, as pointed in Ref. [21]. It was revealed that the most optimized decision of market participants needs effective information disclosure channels .…”

Section: Introductionmentioning

confidence: 99%

Security-constrained competitive mechanism research for the generation-side electricity market based on economic mechanism design theory

Zhu

Ying

Hu³

et al. 2016

Int. Trans. Electr. Energ. Syst.

View full text Add to dashboard Cite

Summary Traditional electricity market mechanisms cannot effectively control strategic behaviors of power generation companies, resulting in reduced market efficiency. Based on the economic mechanism design theory, a decentralized decision‐making competitive mechanism applied in the generation‐side electricity market is developed to reduce the strategic behaviors of generation companies and align individual interests with overall interests. At first, market clearing patterns and characteristics for the generation‐side electricity market are analyzed. Then, a study is conducted on the ideal economic mechanism design to identify 3 main elements of the mechanism, namely, information space, equilibrium information function, and result function. Considering the physical constraints of the electricity system, including generator output constraint and the active power flow constraints for transmission lines, the ideal economic mechanism is refined. Finally, the effectiveness and practicability of the economic mechanism are verified through simulation on IEEE‐14 system.

show abstract

“…In [9] effects of optimal DR resource reserve scheduling, on the system pollution cost were analyzed. Shen et al [10] provided an overview of how electricity market policy and regulation reforms have allowed DR to become a viable demand-side resource to address the energy and environmental challenges.Incentive-based control is implemented by dynamically adjusting the price of energy, ideally as a real-time reflection of the marginal cost of production [11,12]. The idea is that given this financial incentive, consumers will adjust their usage [13,14].…”

mentioning

confidence: 99%

A novel approach using flexible scheduling and aggregation to optimize demand response in the developing interactive grid market architecture

et al. 2016

View full text Add to dashboard Cite

With the increasing presence of intermittent renewable energy generation sources, variable control over loads and energy storage devices on the grid become even more important to maintain this balance. Increasing renewable energy penetration depends on both technical and economic factors. Distribution system consumers can contribute to grid stability by controlling residential electrical device power consumed by water heaters and battery storage systems. Coupled with dynamic supply pricing strategies, a comprehensive system for demand response (DR) exist. Proper DR management will allow greater integration of renewable energy sources partially replacing energy demand currently met by the combustion of fossil-fuels. An enticing economic framework providing increased value to consumers compensates them for reduced control of devices placed under a DR aggregator. Much work has already been done to develop more effective ways to implement DR control systems. Utilizing an integrated approach that combines consumer requirements into aggregate pools, and provides a dynamic response to market and grid conditions, we have developed a mathematical model that can quantify control parameters for optimum demand response and decide which resources to switch and when. In this model, optimization is achieved as a function of cost savings vs. customer comfort using systematic mathematical market analysis. Two market modeling approaches-the Cournot and SFEare presented and compared. A quadratic function is used for presenting the cost function of each DRA (Demand Response Aggregator) which will be used for settling down the DR market. Contribution of each aggregator and the final price are presented. Finally, we have also performed sensitivity analysis on the house cost function's coefficients for one of the aggregators. Index Terms-Demand response market, demand response schedulingAn experimental study was performed in [3] to analyze the effects of DLC-induced temperature cycles on university students' thermal sensation and thermal acceptability in lecture theatres as a worst case setting for DLC-induced thermal environments. The results show that operative temperature, vapor pressure, and the rate of temperature change are the three most important predictors during DLC events. DLC has been implemented successfully in several areas including Hawaii, where Hawaiian Electric has a total of 34,000 DLC customers, collectively providing 15 megawatts of controllable peak demand power. The potential of DRs are studied in [4] in Hawaii in balancing supply and demand on an hourly basis. Much research has been completed concerning various energy market creation strategies employing DR resources [5,6,7,8] . In [9] effects of optimal DR resource reserve scheduling, on the system pollution cost were analyzed. Shen et al. [10] provided an overview of how electricity market policy and regulation reforms have allowed DR to become a viable demand-side resource to address the energy and environmental challenges.Incentive-based control is implement...

show abstract

Incentive compatible pool-based electricity market design and implementation: A Bayesian mechanism design approach

Cited by 31 publications

References 25 publications

A system operator’s utility function for the frequency response market

A system operator’s utility function for the frequency response market

Security-constrained competitive mechanism research for the generation-side electricity market based on economic mechanism design theory

A novel approach using flexible scheduling and aggregation to optimize demand response in the developing interactive grid market architecture

Contact Info

Product

Resources

About