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Enhancing Intraday Price Signals in U.S. ISO Markets for a Better Integration of Variable Energy Resources

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  • Ignacio Herrero
  • Pablo Rodilla
  • Carlos Batlle

Abstract

Efficient operation of power systems increasingly requires accurate forecasting of load and variable energy resources (VER) production, along with flexible resources and markets, capable of adapting to changing conditions in the intraday horizon. It is of utmost importance to reflect these needs in price signals, to align the incentives of market agents with the new challenges. The two-settlement system used by U.S. ISOs falls short to provide efficient intraday economic signals and a cost reflective allocation of intraday rescheduling costs. This paper advocates for a multi-settlement system, which entails calculating intraday prices as forecasts are updated and re-schedules are executed. This approach incorporates more granular prices, as in European intraday markets, while keeping the efficient centralized dispatch logic of the ISO model. A stylized case example illustrates the virtues of a multi-settlement system, which sends cost reflective signals, and consequently facilitates VER integration.

Suggested Citation

  • Ignacio Herrero & Pablo Rodilla & Carlos Batlle, 2018. "Enhancing Intraday Price Signals in U.S. ISO Markets for a Better Integration of Variable Energy Resources," The Energy Journal, , vol. 39(3), pages 141-166, May.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:3:p:141-166
    DOI: 10.5547/01956574.39.3.iher
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    References listed on IDEAS

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    2. Fatih Karanfil and Yuanjing Li, 2017. "The Role of Continuous Intraday Electricity Markets: The Integration of Large-Share Wind Power Generation in Denmark," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
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