Extracting Appropriate Nodal Marginal Prices for All Types of Committed Reserve

• Published in: Computational economics Vol. 53; no. 1; pp. 1 - 26
• Main Authors: Akbary, Paria, Ghiasi, Mohammad, Pourkheranjani, Mohammad Reza Rezaie, Alipour, Hamidreza, Ghadimi, Noradin
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.01.2019; Springer Nature B.V
• Subjects: Appropriateness; Behavioral/Experimental Economics; Computer Appl. in Social and Behavioral Sciences; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Math Applications in Computer Science; Operations Research/Decision Theory; Prices; Pricing; Pricing policies; Reliability; Reserves; Up-/down-going demand-/generation-side reserves; Security constraint unit commitment (SCUC); Marginal pricing
• ISSN: 0927-7099; 1572-9974
• DOI: 10.1007/s10614-017-9716-2

This paper proposes a framework to extract appropriate locational marginal prices for each type of reserve (up-/down-going reserves at both generation- and demand-sides). The proposed reserve pricing scheme accounts for the lost opportunity of selling the convertible products (energy and reserve). The fair prices can be obtained for capacity reserves applying this framework, since this framework assigns the same prices to the same services provided at the same location. The proposed reserve pricing scheme provides all the market participants with the appropriate signals to modify their offers according to the system operator requirements. The pricing problem is decomposed to different hourly sub-problems considering the bounding constraints. To show the effectiveness of the proposed algorithm, it is applied to the IEEE reliability test system and the results are discussed.