462056 Exploiting Dynamic Flexibility to Enable Participation in Multi-Scale Electricity Markets
We develop a mathematical model for multi-scale electricity markets run by the California Independent System Operator (CAISO). The model incorporates prices from both the day-ahead (1 hour intervals) and real-time markets (5 – 15 minute intervals), and considers both energy and ancillary service (regulation, reserves, etc.) sales. Market rules are expressed as linear algebraic expressions with continuous and optionally discrete variables. The models are general and applicable to both conventional thermal generators and storage devices (e.g., batteries).
Using the market model, we optimize the operation policy of a combined heat and power utility system using real price data for all of 2015. We observe participating in energy markets run at multi-times decreases net operating costs (fuel minus market proceeds) by 14 – 54%, depending on fuel price, without degrading satisfaction of onsite steam and electricity demand. The savings increase if the onsite steam and/or electricity demands are made flexible. Approximately one-quarter to one-half of the anticipated savings are from regulation capacity sales to the market. In CAISO, the automatic generator control (AGC) system sends new electricity production setpoints to generators providing regulation every 5 seconds that are within a specified flexibility band (units: MWe). Capacity payments are based on the size of this band. Thus regulation offers a way to monetize the inherent flexibility in manufacturing/energy systems at faster timescales (seconds compared to electricity price variations that occur at slower timescales (minutes to hours). In practice exploiting this flexibility and realizing revenues from electricity markets requires sophisticated controls strategies that manage multiple time-scales and consider uncertainty in market prices.