Price and capacity competition in zero-mean storage and demand response markets

Joshua A. Taylor, Johanna L. Mathieu, Duncan S. Callaway, Kameshwar Poolla

Research output: Chapter in Book/Report/Conference proceedingConference contribution

7 Scopus citations

Abstract

Non-generating resources (NGRs) such as energy storage and demand response can absorb intermittency from the steadily rising number of wind and solar installations. While there is clear advantage in drawing reserves jointly from NGRs and conventional power sources, there are marked differences between the two, which necessitate new market formats specifically tailored to the characteristics of NGRs. Salient differences from traditional ancillary markets include reduced output duration and faster start-up requirements. In line with the numerous game theoretic analyses of competition in primary generation markets, we analyze strategic behavior between NGRs providing fast regulation in reserve markets. We apply a two-stage framework in which firms first declare capacities and then engage in price bidding; the latter stage is commonly known as Bertrand-Edgeworth competition. We obtain new theoretical results pertaining to equilibrium uniqueness when the demand, in this case energy, is random. By applying the model to energy storage competition, we obtain direct comparisons between two representative market formats based on capacity and energy payments. We find that energy payments may lead to slightly more predictable NGR capacity commitment and reduced regulation energy prices.

Original languageEnglish (US)
Title of host publication2012 50th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2012
Pages1316-1323
Number of pages8
DOIs
StatePublished - 2012
Externally publishedYes
Event2012 50th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2012 - Monticello, IL, United States
Duration: Oct 1 2012Oct 5 2012

Publication series

Name2012 50th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2012

Other

Other2012 50th Annual Allerton Conference on Communication, Control, and Computing, Allerton 2012
Country/TerritoryUnited States
CityMonticello, IL
Period10/1/1210/5/12

All Science Journal Classification (ASJC) codes

  • Computer Networks and Communications
  • Computer Science Applications

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