Optimizing Instantaneous and Ramping Reserves With Different Response Speeds for Contingencies—Part II: Implications

Abstract

Part I presents a formulation to optimize reserves for contingent events while explicitly including their response times. Part II highlights the implications of using this formulation in a reserves market. There are four aspects of the formulation that are of interest: (1) the performance of the solver, (2) the importance of inertia and contingency size. These implications are highlighted through two examples. (3) The proposed formulation is compared against a reserve optimization which does not distinguish between different response speeds, but adjusts the reserve requirement to satisfy the same frequency limits. Differentiating between response speeds within the optimization can provide a 23% reduction in total reserve requirement on average, which improves to a reduction of 52% in low inertia conditions. (4) A marginal pricing methodology is developed which prices reserve in a market context, and gives a unique price to each reserve provider depending on response speed. This gives incentive for reserve providers to improve response speed.

Optimizing Instantaneous and Ramping Reserves With Different Response Speeds for Contingencies—Part I: Methodology

“…The number of regions optimized to find the global minimum is estimated to be at most linearly dependent on the problem size. The companion paper [29] provides more examples of the methodology while highlighting the implications of this formulation on reserve market design.…”