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The Hidden System Costs of Wind Generation in a Deregulated Electricity Market

Timothy D. Mount, Surin Maneevitjit, Alberto J. Lamadrid, Ray D. Zimmerman, and Robert J. Thomas

Year: 2012
Volume: Volume 33
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol33-No1-6
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Abstract:
Earlier research has shown that adding wind generation to a network can lower the total annual operating cost by displacing conventional generation. At the same time, the variability of wind generation and the need for higher levels of reserve generating capacity to maintain reliability standards impose additional costs on the system that should not be ignored. The important implication for regulators is that the capacity payments ["missing money"] for each MW of peak system load are now much higher. Hence, the economic benefits of reducing the peak system load using storage or controllable demand will be higher with high penetrations of wind generation. These potential benefits are illustrated in a case study using a test network and a security constrained Optimal Power Flow (OPF) with endogenous reserves (SuperOPF). The results show that the benefits are very sensitive to 1) how much of the inherent variability of wind generation is mitigated, and 2) how the missing money is determined (e.g. comparing regulation with deregulation).Keywords: Electricity markets, Wind generation, Optimum dispatch, Endogenous reserve capacity, Missing money, Total annual system costs.



Developing a Smart Grid that Customers can Afford: The Impact of Deferrable Demand

Wooyoung Jeon, Jung Youn Mo, and Timothy D. Mount

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.wjeo
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Abstract:
With more electricity generated from renewable sources, the importance of effective storage capacity is increasing due to its capability to mitigate the inherent variability of these sources, such as wind and solar power. However, the cost of dedicated storage is high and all customers eventually have to pay. Deferrable demand offers an alternative form of storage that is potentially less expensive because the capital cost is shared between providing an energy service and supporting the grid. This paper presents an empirical analysis to illustrate the beneficial effects of Plug-in Hybrid Electric Vehicles (PHEV) and thermal storage on the total system cost using data for a hot summer day in New York City. The analysis shows how customers can reduce total system costs and their bills by 1) shifting load from expensive peak periods to less expensive off-peak periods, 2) reducing the amount of installed conventional generating capacity needed to maintain System Adequacy, and 3) providing ramping services to mitigate the variability of generation from renewable sources. Moreover, this paper demonstrates economic benefits of different types of customers with different deferrable demand capabilities under two bill payment policies, flat price payment and optimum price payment, and it finally shows how long it takes for customers to fully pay back their initial capital costs of PHEV or thermal storage under two different policies.





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