Three-part auctions versus self-commitment in day-ahead electricity markets

We examine the economic consequences of a bid-based security-constrained centralized unit commitment paradigm based on three-part offers, which is the prevalent day-ahead market-clearing mechanism in restructured electricity markets in the United States. We then compare this approach with an energy-only auction with self-commitment (such as in Australia) addressing efficiency and pricing as well as the tradeoff between coordination losses and incentives to bid truthfully.     

Estimating the value of electricity storage in PJM: Arbitrage and some welfare effects

Significant increases in prices and price volatility of natural gas and electricity have raised interest in the potential economic opportunities for electricity storage. In this paper, we analyze the arbitrage value of a price-taking storage device in PJM during the six-year period from 2002 to 2007, to understand the impact of fuel prices, transmission constraints, efficiency, storage capacity, and fuel mix. The impact of load-shifting for larger amounts of storage, where reductions in arbitrage are offset by shifts in consumer and producer surplus as well as increases in social welfare from a variety of sources, is also considered.     

Cost and emissions impacts of plug-in hybrid vehicles on the Ohio power system

Plug-in hybrid electric vehicles (PHEVs) have been promoted as a potential technology that can reduce vehicles’ fuel consumption, decreasing transportation-related emissions and dependence on imported oil. The net emission and cost impacts of PHEV use are intimately connected with the electricity generator mix used for PHEV charging, which will in turn depend on when during the day PHEVs are recharged. This paper analyzes the effects of a PHEV fleet in the state of Ohio. The analysis considers two different charging scenarios—a controlled and an uncontrolled scenario—which offer the grid operator different levels of control over the timing of PHEV charging. The analysis shows that PHEV use could result in major reductions in gasoline consumption of close to 70% per vehicle compared to a conventional vehicle (CV) under both charging scenarios. Moreover, despite the high penetrations of coal in the Ohio power system, net CO₂ emissions from a PHEV could be up to 24% lower than that of a CV in the uncontrolled case, however, CO₂ and NO_x emissions would increase in both scenarios.     

The value of compressed air energy storage with wind in transmission-constrained electric power systems

In this work, we examine the potential advantages of co-locating wind and energy storage to increase transmission utilization and decrease transmission costs. Co-location of wind and storage decreases transmission requirements, but also decreases the economic value of energy storage compared to locating energy storage at the load. This represents a tradeoff which we examine to estimate the transmission costs required to justify moving storage from load-sited to wind-sited in three different locations in the United States. We examined compressed air energy storage (CAES) in three “wind by wire” scenarios with a variety of transmission and CAES sizes relative to a given amount of wind. In the sites and years evaluated, the optimal amount of transmission ranges from 60% to 100% of the wind farm rating, with the optimal amount of CAES equal to 0–35% of the wind farm rating, depending heavily on wind resource, value of electricity in the local market, and the cost of natural gas.     

Emissions impacts of wind and energy storage in a market environment

This study examines the emissions impacts of adding wind and energy storage to a market-based electric power system. Using Texas as a case study, we demonstrate that market power can greatly effect the emissions benefits of wind, due to most of the coal-fired generation being owned by the two dominant firms. Wind tends to have less emissions benefits when generators exercise market power, since coal-fired generation is withheld from the market and wind displaces natural gas-fired generators. We also show that storage can have greater negative emissions impacts in the presence of wind than if only storage is added to the system. This is due to wind increasing on- and off-peak electricity price differences, which increases the amount that storage and coal-fired generation are used. We demonstrate that this effect is exacerbated by market power.     

A comparative analysis of the value of pure and hybrid electricity storage

Significant natural gas and electricity price variation and volatility, especially during the past few years, raise questions about understanding the value drivers behind electricity storage. The impact of these drivers for pure storage (such as pumped hydroelectric storage) and compressed air energy storage (CAES) are different and in this paper we explore these differences in operation and net revenue over a variety of timescales. We also consider the arbitrage value that is attainable in practice and explain why simple forecasting techniques based on historical data will generally be less successful for CAES. The breakeven cost of storage and how this can depend on regulatory treatment of storage and market structure is also considered.     

Plug-in hybrid electric vehicles can be clean and economical in dirty power systems

Plug-in hybrid electric vehicles (PHEVs) that are driven and charged in ‘dirty’ power systems, with high penetrations of coal and other polluting generation fuels, may yield higher net emissions than conventional vehicles (CVs). We examine the implications of imposing a constraint on PHEV recharging that forces emissions from PHEVs to be no greater than those from a comparable CV. We use the Texas power system, which has a mix of coal- and natural gas-fired generation and has been shown to yield higher emissions from PHEVs than CVs, as a case study. Our results show that imposing the emissions constraint results in most of the PHEV charging loads being shifted from coal- to cleaner natural gas-fired generators. There is, however, virtually no increase in generation or PHEV driving costs due to efficiency benefits that are possible through coordination of unit commitment and PHEV charging decisions.     

Market protocols in ERCOT and their effect on wind generation

Integrating wind generation into power systems and wholesale electricity markets presents unique challenges due to the characteristics of wind power, including its limited dispatchability, variability in generation, difficulty in forecasting resource availability, and the geographic location of wind resources. Texas has had to deal with many of these issues beginning in 2002 when it restructured its electricity industry and introduced aggressive renewable portfolio standards that helped spur major investments in wind generation. In this paper we discuss the issues that have arisen in designing market protocols that take account of these special characteristics of wind generation and survey the regulatory and market rules that have been developed in Texas. We discuss the perverse incentives some of the rules gave wind generators to overschedule generation in order to receive balancing energy payments, and steps that have been taken to mitigate those incentive effects. Finally, we discuss more recent steps taken by the market operator and regulators to ensure transmission capacity is available for new wind generators that are expected to come online in the future.