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Substitute energy price market mechanism for renewable energy power system with generalized energy storage

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  • Xiao, Jucheng
  • He, Guangyu
  • Fan, Shuai
  • Li, Zuyi

Abstract

Incompatibility of current electricity market mechanisms based on locational marginal price (LMP) become prominent in power systems with increasing renewable energy (RE) and generalized energy storage (GES), resulting in soaring electricity prices, high costs of balancing RE, etc. To fundamentally solve this problem, we propose a novel substitute energy price (SEP) market mechanism, compatible with objective market value, new supply–demand relationship and nature of continuous power balance of RE power systems. SEP, reflecting market value of per-unit substitute energy, is discovered for the first time, and thus energy curves can be traded as substitutes at vector level. Based on designed regulation responsibility mechanism, any entity, especially RE generator, can transform its energy curve with regulation demands into substitute by indirect payment. To supply these regulation demands generated by REs and loads, regulation energy is proposed as independent tradable commodities with quantitative market value to adapt to GESs and dispatchable generators. Numerous experiments indicate SEP mechanism overcomes major deficiencies of existing LMP mechanism, provides a level playing field for all energy and regulation resources, promotes construction of GESs and helps improve global social welfare and relieve duck-curve problem. This work will be instrumental in the transformation of current power systems to carbon–neutral RE power systems.

Suggested Citation

  • Xiao, Jucheng & He, Guangyu & Fan, Shuai & Li, Zuyi, 2022. "Substitute energy price market mechanism for renewable energy power system with generalized energy storage," Applied Energy, Elsevier, vol. 328(C).
    • Handle: RePEc:eee:appene:v:328:y:2022:i:c:s0306261922014763
    DOI: 10.1016/j.apenergy.2022.120219
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    1. Zhao, Yu & Zhong, Honglin & Kong, Fanbin & Zhang, Ning, 2023. "Can China achieve carbon neutrality without power shortage? A substitutability perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 182(C).
    2. Meng, Yan & Fan, Shuai & Shen, Yu & Xiao, Jucheng & He, Guangyu & Li, Zuyi, 2023. "Transmission and distribution network-constrained large-scale demand response based on locational customer directrix load for accommodating renewable energy," Applied Energy, Elsevier, vol. 350(C).
    3. Li, Jiamei & Ai, Qian & Chen, Minyu, 2023. "Strategic behavior modeling and energy management for electric-thermal-carbon-natural gas integrated energy system considering ancillary service," Energy, Elsevier, vol. 278(C).

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