Engineering topics

Mays, Jacob

Publications and source records attributed to Mays, Jacob.

3 records

DOE OSTI2023

Rethinking the Price Formation Problem–Part 2: Rewarding Flexibility and Managing Price Risk

In this study, part 1 of this two-part paper describes the impact that uncertainty has on the design and analysis of price formation policies in the non-convex auctions conducted by U.S. wholesale electricity market operators. Using first a toy model and then a large-scale test system, Part 2 demonstrates the difference in prices under the idealized benchmark of ex ante convex hull pricing defined in Part 1 versus existing methods, in particular documenting the potential for suppression of volatility and therefore under-compensation of flexibility by existing methods. The examples highlight that inefficient spot price formation can induce inefficient forward commitments of generators, necessitating out-of-market intervention to restore a reliable and efficient operating plan.Given the potential side effects of existing policies for investment and operation, we suggest two elements in a reoriented approach to the price formation problem: first ensuring that prices exhibit full-strength volatility, and second ensuring that risk-averse market participants have sufficient ability to manage this volatility.

24 POWER TRANSMISSION AND DISTRIBUTION↗

DOE OSTI2023

Rethinking the Price Formation Problem–Part 1: Participant Incentives under Uncertainty

Operators of organized wholesale electricity markets attempt to form prices in such a way that the private incentives of market participants are consistent with a socially optimal commitment and dispatch schedule. In the U.S. context, several competing price formation schemes have been proposed to address the non-convex production cost functions characteristic of most generation technologies. Here, this paper considers how the design and analysis of price formation policies for non-convex markets are affected by the uncertainty inherent in electricity demand and supply. We argue that by excluding uncertainty, the analytical framework underlying existing policies mischaracterizes the incentives of market participants, leading to inefficient price formation and poor incentives for flexibility. We establish favorable theoretical properties of a new construct, ex ante convex hull pricing , and demonstrate the difference between this idealized benchmark and existing methods on a large-scale test system. Given increased operational uncertainty with a transition to wind and solar generation, distortions caused by poor incentives for flexibility are likely to grow without improved price formation in organized wholesale markets.

24 POWER TRANSMISSION AND DISTRIBUTION↗

DOE OSTI2021

Hybrid Resources: Challenges, Implications, Opportunities, and Innovation

The electric power system has historically been designed to provide reliable energy to loads by using a relatively small number of well-understood generators. The distinction between load, generation, and transmission resources has been quite clear. Most of the responsibility for planning and operating a system - building a highly reliable network from less reliable parts - has been with the system manager, whether that be a utility, a regional market operator, or some similar entity. Given this historical context, many experts were initially perplexed by the rapidly growing popularity of hybrid resources, which combine multiple technologies into a single entity. Rather than depending on a system operator to provide instructions to individual technologies, hybrid resources intentionally take on more operational responsibility by optimizing and scheduling their combined functions. Interconnection queues in many regions reveal a large and growing interest in hybrids, suggesting that project developers and investors see them as providing advantages.

generators↗