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Modeling and Market Design Considerations for Conventional and Decarbonized Resources

The following paper reviews various market design issues that will need to be reconsidered due to anticipated changes in the resources that supply energy in wholesale electricity markets. As the energy supply continues towards decarbonization, the change in resource technologies will affect the fundamentals of production scheduling and the policies to address supply variability and uncertainty. We show through simple numerical examples that the existing market design approach based on fuel costs will result in $0/MWh prices with intermittent price spikes during reserve shortages, but that incorporating more granular reserve pricing, energy storage participation, and price-responsive demand participation can restore efficient market clearing with reasonable pricing outcomes. The market design approach fundamentally shifts from fuel based to opportunity cost based. We briefly review alternative market design frameworks that can support this shift, including intraday markets, decentralized markets, flexibility options, and swing contracts. Market designs may also be required to accommodate or support various out-of-market policies and agreements; ideally, these external factors can be integrated into the market design to facilitate efficient exchanges across longer time scales, between other markets, and in support of public policy goals. The paper concludes by discussing how decarbonization trends may affect the design and use of production cost models for short term operations and long term planning studies.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Estimating Energy Market Schedules Using Historical Price Data: Preprint

The global climate crisis is expected to reshape the energy generation landscape in the coming decades. Increasing integration of non-dispatchable renewable energy resources into energy infrastructures and markets increases uncertainty and creates new opportunities for flexible energy systems. To conduct proper economic evaluation of flexible energy systems, such as integrated energy systems (IES), advancements in modelling of market interactions, such as bidding, is crucial. This work presents a shortcut algorithm which uses two mixed integer linear programs to compute dispatch schedules (e.g., hourly power production targets) that are constrained by the resource's bid information and characteristics (e.g., minimum up and down times) based on historical locational marginal price (LMP) data. This is orders of magnitude less data than required for a market clearing calculation with a full production cost model (PCM). We find the shortcut simulator recapitulates generator dispatch signals for the Prescient PCM with approximately 4% error for the RTS-GMLC test system.

electricity generation↗

Estimating Energy Market Schedules using Historical Price Data

The global climate crisis is expected to reshape the energy generation landscape in the coming decades. Increasing integration of non-dispatchable renewable energy resources into energy infrastructures and markets creates uncertainty as well as new opportunities for flexible energy systems. To conduct proper economic evaluation of flexible energy systems, such as integrated energy systems (IES), advancements in modelling of market interactions, such as bidding, is crucial. This work presents a shortcut algorithm which uses two mixed integer linear programs to compute dispatch schedules (e.g., hourly power production targets) that are constrained by the resource's bid information and characteristics (e.g., minimum up and down times) based on historical locational marginal price (LMP) data. The proposed algorithm is approximately 100 times faster and uses orders of magnitude less data than a full production cost model (PCM). We find the shortcut simulator recapitulates generator dispatch signals for the Prescient PCM with approximately 4% error for the RTS-GMLC test system.

electricity generation↗

The importance of capturing power system operational details in resource adequacy assessments

Traditional methods for assessing the resource adequacy (RA) of a power system are becoming obsolete due to emerging trends such as the increasing deployment of variable renewable energy and storage. Consequently, analysts are recommending that RA be assessed using a Monte Carlo simulation approach that models chronological power system operations over many instances of possible operating conditions. However, this approach is necessarily more complex and computationally demanding, which is an obstacle to real-world implementation. Here, in this study, we investigate which operational details of power systems are important to capture in order to accurately evaluate a system's RA, versus details that add complexity but do not meaningfully affect RA results. To do so, we develop a probabilistic RA assessment framework by adapting an existing production cost model and apply it to a case study based on the IEEE Reliability Test System. Our results indicate that multi-year data, storage dispatch, and transmission limits are key details to incorporate. Accurate RA results can be obtained using non-economic dispatch strategies as long as they are coordinated with detailed operational strategies. We also demonstrate how popular expectation-based RA metrics can mask important differences in the characteristics of loss of load events.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Demand Response in Bangalore: Implications for Electricity System Operations

Recent Greening the Grid studies for India highlight the benefits of flexible resources for integrating variable renewable energy onto India’s electricity system. India’s ambitious renewable energy targets, which are particularly focused on renewable resource states such as Karnataka, will face fewer challenges when combined with new planning and operational strategies and technologies. This report explores one such strategy - demand response - by which the system operator shifts load throughout a day to minimize system wide production costs. To explore this strategy, we added demand response resources to Karnataka’s electricity system in a production cost model of India, using load shifting potential analyzed by Lawrence Berkeley National Labs. We then investigated the impacts of increasing demand response capacity under several renewable resource scenarios. Our results show the addition of demand response enables fuel shifting from high-marginal-cost and emissions-intensive subcritical coal and diesel generation to zero-marginal-cost and emissions-free renewable generation. Accordingly, the value that demand response provides to the system increases as the renewable penetration increases. In addition to reducing production costs and emissions, demand response reduces the time that thermal generators spend at their minimum output levels, which typically represents a less efficient and costlier operational state. Agricultural load shifting provides greater value to the system than residential, commercial, or industrial loads. Agricultural demand response is more flexible than other sectors because it is not exposed to subdaily operational constraints and it can operate for more hours per day without impacting customer satisfaction. Further, the first increment of demand response that is added to a system provides the greatest value; further additions provide additional benefits but have a decreasing impact. The insights we discuss could be leveraged by system planners and operators in other jurisdictions, particularly those facing significant renewable energy penetrations, to develop their own demand response programs.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Cooperation in Transmission Expansion Planning: Enhancing Grid Reliability and Efficiency Under a Changing Climate

Electricity grids are challenged to maintain reliability during more intense and frequent extreme weather events due to climate change. This challenge is exacerbated by multi-sector electrification and power sector decarbonization through increased reliance on variable renewable energy, which necessitates the expansion of transmission infrastructure. However, transmission expansion planning is often complicated by intertwined planning authorities and jurisdictions, and allocation of large capital investment needs. These factors cause authorities to manage transmission investments individually (i.e., only/mostly intraregional planning), which can lead to suboptimal transmission networks. This study investigates the potential benefits of cooperative transmission expansion planning (i.e., both intraregional and interregional planning that optimizes transmission investments across the entire physical system). Using sectoral and economic optimization, and machine learning models, it analyzes the impact of different levels of cooperation among transmission planning regions within U.S. Western Interconnection in 2019 and 2059 via an iterative investment process. Furthermore, it examines the effects of future climate change on transmission cooperation by simulating historical heat waves from 2019 under conditions of 2059. The results indicate that cooperative transmission planning leads to lower wholesale electricity prices, decreased energy outages, and reduced greenhouse gas emissions. However, the advantages of collaboration diminish during widespread heat waves, despite remaining beneficial especially for regions like California Independent System Operator with substantial solar installations. The study underscores the importance of transmission cooperation in reducing costs and enhancing reliability, emphasizing the need for strategic investments in storage to address challenges posed by future extreme weather events with varying spatial scales.

Capacity Expansion Model↗

Hydropower Value Drivers

Conventional hydro resources generate the majority of their value by providing energy under most conditions, but the relative fraction of value generated by providing ancillary services and capacity increases with increasing penetration of resources with zero fuel costs. Pumped storage hydropower resources generate the majority of their value by providing capacity under most conditions, but the relative fraction of value generated by providing energy increases with increasing penetration of resources with zero fuel costs. The total value of conventional hydropower generally decreases in systems with increasing penetration of resources with zero fuel costs; this is largely due to the associated decrease in average energy prices. The total value of pumped storage generally increases in systems with increasing penetration of resources with zero fuel costs, largely due to opportunities to operate in pumping mode when energy prices are low or even negative. Energy storage representation must be enhanced to ensure that models accurately capture system value streams for these resources. Current power system models have a limited ability to capture the price dynamics of ancillary services, and it is still challenging to assess the role and magnitude of ancillary service value streams in future systems. Power systems are currently in a state of rapid and dramatic evolution due to a number of different factors, including the increasing penetration of variable renewable energy (VRE) sources, such as wind and solar, and battery energy storage systems (BESS). This evolution will change the way power systems are fundamentally planned and operated. Some of these changes may be incremental, while others may be more significant, but the result will likely be parallel evolution in the definition and requirement of different grid services and therefore a subsequent shift in their relative values. This report presents a framework developed to identify such system value drivers and quantify their relative impact on several different value streams, with a specific focus on implications for conventional hydropower and pumped storage hydropower (PSH) resources. This value drivers framework (VDF) encompasses five core analytical steps: 1. Identify potential drivers and develop scenarios, 2. Execute production cost models, 3. Calibrate prices, 4. Optimize hydropower operations, and 5. Quantify value drivers.

13 HYDRO ENERGY↗

IM3 Data Center Driven Grid Stress Dataset for the U.S. Western Interconnection

This dataset provides projected grid stress and reliability results (including all model inputs and outputs from an open-source grid operations modeling framework - GO), for the Integrated Multisector, Multiscale Modeling (IM3) project, under varying levels of data center demand growth between 2025 and 2035 in the U.S. Western Interconnection. The scenarios and sensitivity experiments are combinations of different data center demand growth rates and energy, weather, population and economic pathways. Data center demand growth projections were sourced from the Electric Power Research Institute (EPRI). The data center demand growth projection names are: Low (3.71% annual data center demand growth) Moderate (5% annual data center demand growth) High (10% annual data center demand growth) Higher (15% annual data center demand growth) Energy, weather, population and economic pathways are informed by two Shared Socioeconomic Pathways (SSP3 and SSP5) and two Representative Concentration Pathways (RCP4.5 and RCP8.5) following the hotter general circulation model (GCM) forcing group from a set of perturbed thermodynamics simulations. The resulting pathway names are: rcp45hotter_ssp3 rcp45hotter_ssp5 rcp85hotter_ssp3 rcp85hotter_ssp5 The main scenarios and sensitivity experiments are detailed below. Reference scenario: The projected grid stress and reliability results for the U.S. Western Interconnection from a previous study. This scenario does not consider data center demand growth explicitly. Data center scenario: Building on the reference scenario, this scenario considers various data center growth rates and how they impact the U.S. Western Interconnection. Data center loads are modeled as flat 8760-hr profiles. This scenario does not consider new generation and transmission capacities specifically designed to meet the new data center demands. The related folder is named "flat". Delayed generator retirements sensitivity experiment: Building on the data center scenario, this experiment explores the impact of different levels of natural gas and nuclear generator retirement delays. The resulting scenario names are: (1) postponing 100% nuclear retirements; (2) postponing 100% nuclear and 25% natural gas retirements; (3) postponing only 50% natural gas retirements; (4) postponing 100% nuclear and 50% natural gas retirements; (5) postponing 100% nuclear and 75% natural gas retirements; and (6) postponing 100% nuclear and 100% natural gas retirements. The related folder names are: no_gen_retire_0_gas, no_gen_retire_25_gas, no_gen_retire_50_gas, no_gen_retire_50_gas_only, no_gen_retire_75_gas, and no_gen_retire_100_gas. Demand response through curtailment sensitivity experiment: Building on the data center scenario, this experiment explores the impact of different participation and compensation levels of data center demand response. The resulting scenario names are: (1) 5% demand available for curtailment with 750 $/MWh compensation; (2) 5% demand available for curtailment with 500 $/MWh compensation; (3) 5% demand available for curtailment with 250 $/MWh compensation; (4) 15% demand available for curtailment with 750 $/MWh compensation; (5) 15% demand available for curtailment with 500 $/MWh compensation; and (6) 15% demand available for curtailment with 250 $/MWh compensation. The related folder names are: dr_cost_250_drup_0_drdown_5, dr_cost_250_drup_0_drdown_15, dr_cost_500_drup_0_drdown_5, dr_cost_500_drup_0_drdown_15, dr_cost_750_drup_0_drdown_5, and dr_cost_750_drup_0_drdown_15. Combination of delayed generator retirements and demand response through curtailment sensitivity experiment: The impact of combining postponing 100% nuclear and 25% natural gas retirements with 5% demand available for curtailment with 750 $/MWh compensation is simulated. The related folder is named "dr_cost_750_drup_0_drdown_5_nuc_100_gas_25". Please refer to the README file for a detailed description of the dataset including individual files and references.

Artificial Intelligence↗

Cooperative Transmission Expansion Planning Experiment Data and Results

GO WEST is an open-source power grid modeling framework for U.S. Western Interconnection, which allows users to tailor the model depending on their research study and science questions. It covers 28 balancing authorities (BA) and 12 states in U.S. Western Interconnection. GO WEST allows users to select different number of nodes and come up with a simplified network by utilizing 10,000 nodal topology of U.S. Western Interconnection created by Texas A&M University. Users can try and select different number of nodes, mathematical formulations (linear programming vs. mixed-integer linear programming), transmission line limit scaling factors, and hurdle rate scaling factors. GO WEST offers a unit commitment and economic dispatch (UC/ED) module to simulate grid operations on an hourly scale. In this sense, users can calibrate and validate their model versions by comparing model outputs to historical datasets. TEP is an open-source transmission capacity expansion model, built on GO WEST framework. It utilizes linear programming to optimize transmission capacity addition investment on existing lines within GO WEST framework. In this sense, TEP model only increases the thermal capacity of existing transmission lines and does not add new lines to the system, which leaves the topology preserved. TEP minimizes the total cost of the system which comprises the operational cost of satisfying electricity demand (i.e., generation cost), cost of loss of load (i.e., unserved energy), cost of power flow, and cost of new transmission capacity additions (i.e., investment cost). In order to use TEP model, users need to create scenarios with GO WEST framework. In this analysis, outputs from several models are used to create future inputs to GO WEST and TEP models, including GCAM-USA, TELL, CERF and reV. This dataset includes experiment inputs and outputs from three different transmission expansion scenarios (cooperative, intermediate, and individual) for 2019 and 2059. For 2019, a base scenario to illustrate the default (i.e., historical) power grid operations is also included. This study utilizes rcp45hotter_ssp3 scenario from a previous version of GCAM-USA simulations. Sources of the shapefiles in supplementary data are HIFLD Open and U.S. Energy Atlas. Please see the README file for a detailed description of the main and supplementary data.

Capacity Expansion Model↗

Opportunities for wave energy in bulk power system operations

Wave energy resources have high, yet largely untapped potential as candidate generation technology. In this paper, we perform a data-driven analysis to characterize the impact of wave energy integration on bulk-scale power systems and market operations. Through data-driven sensitivity studies centered on an optimization-based production cost modeling formulation, our work characterizes the inflection point beyond which wave integration starts impacting power system operations, considering present day transmission infrastructure. Furthermore, our analysis also considers the joint effects of wave energy integration and system-wide transmission expansion. Finally, potential resilience scenarios such as wildfire-driven transmission contingencies and heat wave events are investigated, whereby the contributions of grid-integrated wave energy in alleviating the effects of the resilience events are analyzed. As our demonstration test bed, we consider a reduced-order network topology for the U.S. Western Interconnection with wave energy generation integrated at carefully selected sites across the coastal areas of Washington, Oregon, and northern California. Our results indicate that over a representative year of operations, wave energy integration systematically reduces locational marginal prices (LMPs) of energy and price volatility, especially during periods of high wave resource availability (winter months for the U.S. west coast). Average, maximum, and minimum of hourly LMPs over a typical year of operation was reduced by 2.95, 51.28, and 1.13 $\$$/MWh respectively (over a baseline scenario with no wave energy integration), when the selected network model had a total of 5000 MW wave power installed capacity during the representative year of study. The effects of wave energy integration can remain localized with existing transmission infrastructure (identified to be most pronounced in the Pacific Northwest region in the example we studied). However, with concurrent transmission expansion, the impacts of wave energy integration are likely to have a higher geographical spread. Our results also indicate that wave energy may be able to assist power system operations during resilience events such as major transmission contingencies and heat wave events, although such benefits might be dependent on factors such as proximity of affected area to wave resources, availability of adequate resource potential and adequate transmission capacity.

16 TIDAL AND WAVE POWER↗

On the operational characteristics and economic value of pumped thermal energy storage

Pumped thermal energy storage (PTES) systems use an electrically-driven heat pump to store electricity in the form of thermal energy, and subsequently dispatch the stored thermal energy to generate electricity using a thermodynamic heat engine. Optimal day-ahead operational scheduling and annual value of a PTES system based on Joule-Brayton thermodynamic cycles and two-tank molten salt hot thermal storage is evaluated in this work. Production cost models, which simultaneously optimize commitment and dispatch schedules for an entire set of generators to minimize the cost of satisfying electricity demand, are employed to determine system-optimal operation and day-ahead energy value of the PTES system within each of six hypothetical near-future grid scenarios intended to approximately represent the U.S. Western Interconnection or the Texas Interconnection. Sensitivity to grid scenario (including the contribution of variable renewable energy sources), thermal storage capacity, relative heat pump and heat engine capacities, and startup/shutdown cycling costs are evaluated. PTES energy value and heat engine annual capacity factor increase strongly as the contribution of variable renewable resources increases, heat pump capacity increases relative to heat engine capacity, or PTES cycling costs decrease. Grid scenarios in which the contribution of variable renewable energy is dominated by solar photovoltaics (PV) vs. wind produce inherently different PTES operational patterns. Annual PTES energy value within PV-dominated scenarios increased with storage capacity only up to approximately seven hours of full-load discharge capacity, whereas that within wind-dominated scenarios exhibited a continual increase with storage duration up to at least 16 hours.

24 POWER TRANSMISSION AND DISTRIBUTION↗

Multi-timescale operations of nuclear-renewable hybrid energy systems for reserve and thermal product provision

In this paper, an optimal operation strategy of a nuclear-renewable hybrid energy system (N-R HES), in conjunction with a district heating network, is developed within a comprehensive multi-timescale electricity market framework. The grid-connected N-R HES is simulated to explore the capabilities and benefits of N-R HES of providing energy products, different reserve products, and thermal products. An N-R HES optimization and control strategy is formulated to exploit the benefits from the hybrid energy system in terms of both energy and ancillary services. A case study is performed on the customized NREL-118 bus test system with high renewable penetrations, based on a multi-timescale (i.e., three-cycle) production cost model. Both day-ahead and real-time market clearing prices are determined from the market model simulation. In conclusion, the results show that the N-R HES can contribute to the reserve requirements and also meet the thermal load, thereby increasing the economic efficiency of N-R HES (with increased revenue ranging from 1.55% to 35.25% at certain cases) compared to the baseline case where reserve and thermal power exports are not optimized.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗

Integrated System Planning: Emerging Software Requirements in the Power Industry

Power system planning software remains fragmented across organizational boundaries, with specialized tools for capacity expansion, production cost modeling, power flow, and dynamic analysis operating on incompatible data models and assumptions. This article argues that the fragmentation is not merely a technical problem but a predictable consequence of Conway's law: software architectures mirror the departmental structures within which they are developed. Regulatory milestones like Federal Energy Regulatory Commission (FERC) Order 888 formalized these divisions, but the roots trace back to the distinct engineering disciplines-mechanical, chemical, and electrical-that staffed generation and transmission planning departments in vertically integrated utilities. As the industry moves toward integrated system planning (ISP) that coordinates generation, transmission, and distribution investment decisions, the software ecosystem must evolve accordingly. We identify five categories of software requirements to enable this transition: coherent data inputs decoupled from individual applications, unified and extensible data schemas, modular component representations that support multiple abstraction levels, lifecycle management of planning datasets, and well-defined application programming interface (API) contracts that separate data exchange from algorithmic control. We examine how these requirements interact with three common workflow patterns-serial gate clearing, sequential multiapplication, and convergence oriented-and discuss the interface design principles each demands. We then outline a vision for platform-based planning architectures where specialized analytical services compose through standardized interfaces and where artificial intelligence (AI)/machine learning (ML) tools augment decision support within a disciplined software infrastructure. The practices proposed here offer a path from today's siloed tool collections toward collaborative planning ecosystems capable of handling the complexity of modern power system transformation.

24 POWER TRANSMISSION AND DISTRIBUTION↗

How Can Probabilistic Solar Power Forecasts Be Used to Lower Costs and Improve Reliability in Power Spot Markets? A Review and Application to Flexiramp Requirements

Net load uncertainty in electricity spot markets is rapidly growing. There are five general approaches by which system operators and market participants can use probabilistic forecasts of wind, solar, and load to help manage this uncertainty. These include operator situation awareness, resource risk hedging, reserves procurement, definition of contingencies, and explicit stochastic optimization. We review these approaches, and then provide a case study in which a method for using probabilistic solar forecasts to define needs for reserves is developed and evaluated. The case study has three parts. First, we describe building blocks for enhancing the Watt-Sun solar forecasting system to produce probabilistic irradiance and power forecasts. Second, relationships between Watt-Sun forecasts for multiple sites in California and the system's need for flexible ramp capability (flexiramp) are defined by machine learning and statistical methods. Third, the performance of present methods to defining flexiramp requirements, which are not conditioned on weather and renewables forecasts, is compared with that of probabilistic solar forecast-based requirements, using a multi-timescale production costing model with an 1820-bus representation of the WECC power system. Significant potential savings in fuel and flexiramp procurement costs from using solar-informed reserve requirements are found.

14 SOLAR ENERGY↗

Design, Integration and Synthesis Platform to Advance Tightly Coupled Hybrid Energy Systems (DISPATCHES) v0.1.0

The DISPATCHES software will enable the design and optimization of Integrated Energy Systems (IES). The platform will support hybridizing existing generation facilities (such as nuclear and coal plants) as well as greenfield hybrid designs that incorporate advanced technologies (such as Advanced Modular Reactors and Coal FIRST), and it will enable the consideration of multiple technology options with different time constants. The design of the IES will be optimized for operation within the bulk power system via energy market signals (day ahead, real-time, and ancillary services) obtained from a production cost model. The goal of DISPATCHES is to identify flexible, dynamic designs that are responsive to grid market signals resulting in highly efficient, cost effective tightly coupled hybrid energy systems that can act as a "black box" to the grid to provide increased flexibility and resiliency.

Gunter, Daniel↗

PSI (PowerSimulations.jl) [SWR-23-104]

PowerSimulations.jl is a Julia-based BSD- licensed power system operations simulation tool developed as a flexible and open source software for quasi-static power systems simulations including Production Cost Models. PowerSimulations.jl tackles the issues of developing a simulation model in a modular way providing tools for the formulation of decision models and emulation models that can be solved independently or in an interconnected fashion. For further information regarding the Sienna modeling framework at NREL, see: https://www.nrel.gov/analysis/sienna.html

Lara Aguilar, Jose Daniel↗

GRid Analysis and Visualization Interface (GRAVI) [SWR-24-16]

GRAVI (GRid Analysis and Visualization Interface) is a web application for viewing and analyzing nodal Production Cost Model (PCM) and Capacity Expansion Model (CEM) simulations. The web application provides the ability to animate geospatially coupled timeseries data in an agnostic way regardless of the underlying simulation tool used to generate the data. GRAVI also provides capabilities to animate non-geospatial data relevant to a PCM or CEM model. Furthermore, this web application can be tailored as an real-time operational tool to better understand a live grid.

Webb, Micah↗

Exploring the Grid Value Potential of Offshore Wind Energy in Oregon

The grid value of Oregon's offshore wind resource is considered through the lenses of (i) resource complementarity with the hydroelectric system and other Variable Renewable Energy resources, (ii) load complementarity with the four balancing authorities with territory in Oregon, and (iii) spatial value to regional and coastal grids as represented through a Production Cost Model of the WECC system. Capacity implications of the interactions between offshore wind and the historical east-to-west power flows of the region are reviewed. The existing system is shown to accommodate 2GW of offshore wind interconnections without curtailment.

17 WIND ENERGY↗