Design of Multi-Settlement Electricity Markets Considering Demand Response and Battery Energy Storage Systems Participation

Abstract

This article presents a novel framework with new mathematical models that integrate Demand Response (DR) and Battery Energy Storage Systems (BESSs) simultaneously in a Locational Marginal Price (LMP)-based Multi-Settlement Market (MSM), i.e. a coordinated Day-Ahead Market (DAM) and Real-Time Market (RTM). A new set of generator ramping constraints, developed from the DAM settlement, and referred to as Day-Ahead Load-Following (DALF) Ramp, are included in the RTM auction model. The performance of the mathematical models are tested on the IEEE 24-bus Reliability Test System (RTS) by carrying out various case studies, scenarios, uncertainty and sensitivity analyses. Effect of DR and BESS characteristics such as level of participation, initial state-of-charge (SOC), discharge rate, etc. on market settlement is examined. The results demonstrate the merits of the proposed framework, and the impact of the DALF Ramp, DR and BESS inclusion in the MSM auction models on marginal prices, market settlement and system operation. It is noted that the system with DR and BESS in the MSM hedges real-time prices and effectively supports system operation during uncertain events such as line and generators outages, changes in demand or in generation from renewables.