A Distribution Market Clearing Mechanism for Renewable Generation Units With Zero Marginal Costs

Yang, Jiajia, Zhao, Junhua, Qiu, Jing, and Wen, Fushuan (2019) A Distribution Market Clearing Mechanism for Renewable Generation Units With Zero Marginal Costs. IEEE Transactions on Industrial Informatics, 15 (8). pp. 4775-4787.

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Abstract

A key feature of an electricity distribution market is that it may be dominated by renewable generation with zero marginal cost. Existing market mechanisms are likely to fail in this context since it cannot generate a reasonable price signal to compensate for the investment cost of renewable generators. Given this background, a double-sided auction market mechanism is presented for pricing the zero marginal cost renewable generation in the distribution system. Honesty is proved to be a dominant strategy for participants, which would enable the proposed mechanism to develop into a set-and-forget bidding market. The proposed market mechanism is also shown to be compatible with the nodal pricing system. Finally, case studies are carried out, and the results show that under the proposed market mechanism, the problem of always bidding a zero price by renewable generators in some existing markets can be avoided. Even when only renewable generation units with zero marginal costs participate in the bidding, the proposed mechanism can still produce a reasonable market clearing price. When adopting the average pricing market mechanism, merits of nodal pricing can still be retained and contribute to the enhancement of the operating efficiency of the distribution network.

Item ID: 78123
Item Type: Article (Research - C1)
ISSN: 1941-0050
Copyright Information: Published Version: © 2019 IEEE. AAM may be made open in an Institutional Repository without embargo.
Funders: Australian Research Council (ARC)
Projects and Grants: ARC DP180103217
Date Deposited: 07 Jun 2023 22:52
FoR Codes: 40 ENGINEERING > 4008 Electrical engineering > 400802 Electrical circuits and systems @ 30%
38 ECONOMICS > 3803 Economic theory > 380399 Economic theory not elsewhere classified @ 30%
40 ENGINEERING > 4008 Electrical engineering > 400803 Electrical energy generation (incl. renewables, excl. photovoltaics) @ 40%
SEO Codes: 15 ECONOMIC FRAMEWORK > 1599 Other economic framework > 159901 Carbon and emissions trading @ 50%
17 ENERGY > 1704 Energy transformation > 170499 Energy transformation not elsewhere classified @ 50%
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