Ahead of Print article ยท Journal article
Incentive-Compatibility in a Two-Stage Stochastic Electricity Market with High Wind Power Penetration
University of Mons1
Center for Electric Power and Energy, Centers, Technical University of Denmark2
Energy Analytics and Markets, Center for Electric Power and Energy, Centers, Technical University of Denmark3
Department of Electrical Engineering, Technical University of Denmark4
Department of Technology, Management and Economics, Technical University of Denmark5
A major restructuring of electricity markets takes place worldwide, pursuing maximum economic efficiency. In most modern electricity markets, including the widely adapted Locational Marginal Price (LMP) market, efficiency is only guaranteed under the assumption of perfect competition. Moreover, market design is heavily focused on deterministic conventional generation.
Electricity markets, though, are vulnerable to strategic behaviors and challenged by the increased penetration of renewable energy generation. In this paper, we cope with the aforementioned bottlenecks by investigating the application of Vickrey-Clarke-Groves (VCG) auction in a twostage stochastic electricity market.
The VCG mechanism achieves incentive-compatibility by rewarding market participants for their contribution towards market efficiency, being attractive from both market operation and participants perspectives. Both traditional and VCG market-clearing approaches are explored and compared, investigating as well the impact of increasing wind power penetration.
The main shortcoming of VCG, i.e., not ensuring revenue-adequacy, is quantified in terms of market budget imbalance for various levels of wind power penetration. To this end, a novel ex-post budget redistribution scheme is proposed, which achieves to partially recover budget deficit.
Language: | English |
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Publisher: | IEEE |
Year: | 2019 |
Pages: | 2846-2858 |
ISSN: | 15580679 and 08858950 |
Types: | Ahead of Print article and Journal article |
DOI: | 10.1109/TPWRS.2019.2901249 |
ORCIDs: | 0000-0002-4577-1349 , Kazempour, Jalal , Papakonstantinou, Athanasios and Pinson, Pierre |