IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i17p5320-d623170.html
   My bibliography  Save this article

Optimal Variable Renewable Energy Generation Schedules Considering Market Prices and System Operational Constraints

Author

Listed:
  • Veeraya Imcharoenkul

    (Department of Electrical Engineering, Faculty of Engineering, Chulalongkorn University, Bangkok 10330, Thailand)

  • Surachai Chaitusaney

    (Department of Electrical Engineering, Faculty of Engineering, Chulalongkorn University, Bangkok 10330, Thailand)

Abstract

The maximization of output from variable renewable energy (VRE) sources considering system operational constraints (SOCs) is a traditional method for maximizing VRE generators’ profits. However, in wholesale electricity markets, VRE participation tends to reduce marginal prices (MP) because of its low marginal costs. This circumstance, called the “merit-order effect” (MOE), reduces the generators’ profits. Thus, the traditional method is possibly no longer the best and only method to maximize the generators’ profits. Moreover, the VRE support schemes also affect MP, making MOE more severe. VRE curtailment can relieve MOE, but VRE output must be decreased, thereby reducing the generators’ profits. This paper proposes a method to find the optimal VRE generation schedules that maximize VRE generators’ profits while considering the trade-off among the VRE output, MP, and SOCs. The method combines the merit-order model and the unit-commitment model solved by the optimization tools in MATLAB. Thailand’s electrical system was the test system. The result shows that VRE generators’ profits from the proposed method are significantly higher than from the traditional method when the system has high wind penetration, and the generators have no support scheme. Curtailing approximately 7–10% of wind output can increase the average MP by 23.6–30%.

Suggested Citation

  • Veeraya Imcharoenkul & Surachai Chaitusaney, 2021. "Optimal Variable Renewable Energy Generation Schedules Considering Market Prices and System Operational Constraints," Energies, MDPI, vol. 14(17), pages 1-18, August.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:17:p:5320-:d:623170
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/17/5320/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/14/17/5320/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Henriot, Arthur, 2015. "Economic curtailment of intermittent renewable energy sources," Energy Economics, Elsevier, vol. 49(C), pages 370-379.
    2. Hirth, Lion & Ueckerdt, Falko & Edenhofer, Ottmar, 2015. "Integration costs revisited – An economic framework for wind and solar variability," Renewable Energy, Elsevier, vol. 74(C), pages 925-939.
    3. Klinge Jacobsen, Henrik & Schröder, Sascha Thorsten, 2012. "Curtailment of renewable generation: Economic optimality and incentives," Energy Policy, Elsevier, vol. 49(C), pages 663-675.
    4. Ringel, Marc, 2006. "Fostering the use of renewable energies in the European Union: the race between feed-in tariffs and green certificates," Renewable Energy, Elsevier, vol. 31(1), pages 1-17.
    5. Thao Pham, 2019. "Market Power Issues in Liberalized Wholesale Electricity Markets: A Review of the Literature with a Look into the Future," Revue d'économie politique, Dalloz, vol. 129(3), pages 325-354.
    6. del Río, Pablo & Mir-Artigues, Pere, 2014. "Combinations of support instruments for renewable electricity in Europe: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 287-295.
    7. Lion Hirth, 2018. "What caused the drop in European electricity prices? A factor decomposition analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    8. Ueckerdt, Falko & Hirth, Lion & Luderer, Gunnar & Edenhofer, Ottmar, 2013. "System LCOE: What are the costs of variable renewables?," Energy, Elsevier, vol. 63(C), pages 61-75.
    9. Clò, Stefano & Cataldi, Alessandra & Zoppoli, Pietro, 2015. "The merit-order effect in the Italian power market: The impact of solar and wind generation on national wholesale electricity prices," Energy Policy, Elsevier, vol. 77(C), pages 79-88.
    10. Ueckerdt, Falko & Brecha, Robert & Luderer, Gunnar, 2015. "Analyzing major challenges of wind and solar variability in power systems," Renewable Energy, Elsevier, vol. 81(C), pages 1-10.
    11. Hirth, Lion, 2013. "The market value of variable renewables," Energy Economics, Elsevier, vol. 38(C), pages 218-236.
    12. Thao Pham, 2019. "Market Power Issues in Liberalized Wholesale Electricity Markets: A Review of the Literature with a Look into the Future," Post-Print hal-02568252, HAL.
    13. Stelios Loumakis & Eugenia Giannini & Zacharias Maroulis, 2019. "Merit Order Effect Modeling: The Case of the Hellenic Electricity Market," Energies, MDPI, vol. 12(20), pages 1-20, October.
    14. Bird, Lori & Lew, Debra & Milligan, Michael & Carlini, E. Maria & Estanqueiro, Ana & Flynn, Damian & Gomez-Lazaro, Emilio & Holttinen, Hannele & Menemenlis, Nickie & Orths, Antje & Eriksen, Peter Børr, 2016. "Wind and solar energy curtailment: A review of international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 577-586.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yi, Zonggen & Luo, Yusheng & Westover, Tyler & Katikaneni, Sravya & Ponkiya, Binaka & Sah, Suba & Mahmud, Sadab & Raker, David & Javaid, Ahmad & Heben, Michael J. & Khanna, Raghav, 2022. "Deep reinforcement learning based optimization for a tightly coupled nuclear renewable integrated energy system," Applied Energy, Elsevier, vol. 328(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ruhnau, Oliver & Hirth, Lion & Praktiknjo, Aaron, 2020. "Heating with wind: Economics of heat pumps and variable renewables," Energy Economics, Elsevier, vol. 92(C).
    2. Zerrahn, Alexander, 2017. "Wind Power and Externalities," Ecological Economics, Elsevier, vol. 141(C), pages 245-260.
    3. Ueckerdt, Falko & Pietzcker, Robert & Scholz, Yvonne & Stetter, Daniel & Giannousakis, Anastasis & Luderer, Gunnar, 2017. "Decarbonizing global power supply under region-specific consideration of challenges and options of integrating variable renewables in the REMIND model," Energy Economics, Elsevier, vol. 64(C), pages 665-684.
    4. Pietzcker, Robert C. & Ueckerdt, Falko & Carrara, Samuel & de Boer, Harmen Sytze & Després, Jacques & Fujimori, Shinichiro & Johnson, Nils & Kitous, Alban & Scholz, Yvonne & Sullivan, Patrick & Ludere, 2017. "System integration of wind and solar power in integrated assessment models: A cross-model evaluation of new approaches," Energy Economics, Elsevier, vol. 64(C), pages 583-599.
    5. Rao, A. Gangoli & van den Oudenalder, F.S.C. & Klein, S.A., 2019. "Natural gas displacement by wind curtailment utilization in combined-cycle power plants," Energy, Elsevier, vol. 168(C), pages 477-491.
    6. Alexis Tantet & Philippe Drobinski, 2021. "A Minimal System Cost Minimization Model for Variable Renewable Energy Integration: Application to France and Comparison to Mean-Variance Analysis," Energies, MDPI, vol. 14(16), pages 1-38, August.
    7. Soria, Rafael & Portugal-Pereira, Joana & Szklo, Alexandre & Milani, Rodrigo & Schaeffer, Roberto, 2015. "Hybrid concentrated solar power (CSP)–biomass plants in a semiarid region: A strategy for CSP deployment in Brazil," Energy Policy, Elsevier, vol. 86(C), pages 57-72.
    8. Reichenberg, Lina & Hedenus, Fredrik & Odenberger, Mikael & Johnsson, Filip, 2018. "The marginal system LCOE of variable renewables – Evaluating high penetration levels of wind and solar in Europe," Energy, Elsevier, vol. 152(C), pages 914-924.
    9. Khanna, Tarun M., 2022. "Using agricultural demand for reducing costs of renewable energy integration in India," Energy, Elsevier, vol. 254(PC).
    10. Schill, Wolf-Peter, 2014. "Residual Load, Renewable Surplus Generation and Storage Requirements in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 73, pages 65-79.
    11. Romeiro, Diogo Lisbona & Almeida, Edmar Luiz Fagundes de & Losekann, Luciano, 2020. "Systemic value of electricity sources – What we can learn from the Brazilian experience?," Energy Policy, Elsevier, vol. 138(C).
    12. Philipp Beiter & Aubryn Cooperman & Eric Lantz & Tyler Stehly & Matt Shields & Ryan Wiser & Thomas Telsnig & Lena Kitzing & Volker Berkhout & Yuka Kikuchi, 2021. "Wind power costs driven by innovation and experience with further reductions on the horizon," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 10(5), September.
    13. Li, Yanxue & Gao, Weijun & Ruan, Yingjun & Ushifusa, Yoshiaki, 2018. "The performance investigation of increasing share of photovoltaic generation in the public grid with pump hydro storage dispatch system, a case study in Japan," Energy, Elsevier, vol. 164(C), pages 811-821.
    14. Alexis Tantet & Philippe Drobinski, 2021. "A Minimal System Cost Minimization Model for Variable Renewable Energy Integration: Application to France and Comparison to Mean-Variance Analysis," Post-Print hal-03350191, HAL.
    15. Kondziella, Hendrik & Bruckner, Thomas, 2016. "Flexibility requirements of renewable energy based electricity systems – a review of research results and methodologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 10-22.
    16. Ruhnau, Oliver, 2022. "How flexible electricity demand stabilizes wind and solar market values: The case of hydrogen electrolyzers," Applied Energy, Elsevier, vol. 307(C).
    17. Mowers, Matthew & Mignone, Bryan K. & Steinberg, Daniel C., 2023. "Quantifying value and representing competitiveness of electricity system technologies in economic models," Applied Energy, Elsevier, vol. 329(C).
    18. Javier L'opez Prol & Wolf-Peter Schill, 2020. "The Economics of Variable Renewables and Electricity Storage," Papers 2012.15371, arXiv.org.
    19. Cloete, Schalk & Hirth, Lion, 2020. "Flexible power and hydrogen production: Finding synergy between CCS and variable renewables," Energy, Elsevier, vol. 192(C).
    20. Ueckerdt, Falko & Brecha, Robert & Luderer, Gunnar & Sullivan, Patrick & Schmid, Eva & Bauer, Nico & Böttger, Diana & Pietzcker, Robert, 2015. "Representing power sector variability and the integration of variable renewables in long-term energy-economy models using residual load duration curves," Energy, Elsevier, vol. 90(P2), pages 1799-1814.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:17:p:5320-:d:623170. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.