Flexible Reserve Markets for Wind Integration

Open Access
Fernandez, Alisha Rachel
Graduate Program:
Energy and Mineral Engineering
Doctor of Philosophy
Document Type:
Date of Defense:
May 19, 2014
Committee Members:
  • Seth Adam Blumsack, Dissertation Advisor
  • Seth Adam Blumsack, Committee Chair
  • R Larry Grayson, Committee Member
  • Jeffery Brownson, Committee Member
  • Susan W Stewart, Committee Member
  • Patrick M Reed, Special Member
  • wind integration
  • electricity markets
  • hydro power
  • PJM
  • ecosystem services
  • ancillary services
  • wind forecast
The increased interconnection of variable generation has motivated the use of improved forecasting to more accurately predict future production with the purpose to lower total system costs for balancing when the expected output exceeds or falls short of the actual output. Forecasts are imperfect, and the forecast errors associated with utility-scale generation from variable generators need new balancing capabilities that cannot be handled by existing ancillary services. Our work focuses on strategies for integrating large amounts of wind generation under the flex reserve market, a market that would called upon for short-term energy services during an under or oversupply of wind generation to maintain electric grid reliability. The flex reserve market would be utilized for time intervals that fall in-between the current ancillary services markets that would be longer than second-to-second energy services for maintaining system frequency and shorter than reserve capacity services that are called upon for several minutes up to an hour during an unexpected contingency on the grid. In our work, the wind operator would access the flex reserve market as an energy service to correct for unanticipated forecast errors, akin to paying the generators participating in the market to increase generation during a shortfall or paying the other generators to decrease generation during an excess of wind generation. Such a market does not currently exist in the Mid-Atlantic United States. The Pennsylvania-New Jersey-Maryland Interconnection (PJM) is the Mid-Atlantic electric grid case study that was used to examine if a flex reserve market can be utilized for integrating large capacities of wind generation in a low-cost manner for those providing, purchasing and dispatching these short-term balancing services. The following work consists of three studies. The first examines the ability of a hydroelectric facility to provide short-term forecast error balancing services via a flex reserve market, identifying the operational constraints that inhibit a multi-purpose dam facility to meet the desired flexible energy demand. The second study transitions from the hydroelectric facility as the decision maker providing flex reserve services to the wind plant as the decision maker purchasing these services. In this second study, methods for allocating the costs of flex reserve services under different wind policy scenarios are explored that aggregate farms into different groupings to identify the least-cost strategy for balancing the costs of hourly day-ahead forecast errors. The least-cost strategy may be different for an individual wind plant and for the system operator, noting that the least-cost strategy is highly sensitive to cost allocation and aggregation schemes. The latter may also cause cross-subsidies in the cost for balancing wind forecast errors among the different wind farms. The third study builds from the second, with the objective to quantify the amount of flex reserves needed for balancing future forecast errors using a probabilistic approach (quantile regression) to estimating future forecast errors. The results further examine the usefulness of separate flexible markets PJM could use for balancing oversupply and undersupply events, similar to the regulation up and down markets used in Europe. These three studies provide the following results and insights to large-scale wind integration using actual PJM wind farm data that describe the markets and generators within PJM. • Chapter 2 provides an in-depth analysis of the valuable, yet highly-constrained, energy services multi-purpose hydroelectric facilities can provide, though the opportunity cost for providing these services can result in large deviations from the reservoir policies with minimal revenue gain in comparison to dedicating the whole of dam capacity to providing day-ahead, baseload generation. • Chapter 3 quantifies the system-wide efficiency gains and the distributive effects of PJM’s decision to act as a single balancing authority, which means that it procures ancillary services across its entire footprint simultaneously. This can be contrasted to Midwest Independent System Operator (MISO), which has several balancing authorities operating under its footprint. • Chapter 4 uses probabilistic methods to estimate the uncertainty in the forecast errors and the quantity of energy needed to balance these forecast errors at a certain percentile. Current practice is to use a point forecast that describes the conditional expectation of the dependent variable at each time step. The approach here uses quantile regression to describe the relationship between independent variable and the conditional quantiles (equivalently the percentiles) of the dependent variable. An estimate of the conditional density is performed, which contains information about the covariate relationship of the sign of the forecast errors (negative for too much wind generation and positive for too little wind generation) and the wind power forecast. This additional knowledge may be implemented in the decision process to more accurately schedule day-ahead wind generation bids and provide an example for using separate markets for balancing an oversupply and undersupply of generation. Such methods are currently used for coordinating large footprints of wind generation in Europe.