A revenue-adequate market design for Grid-enhancing technologies

Abstract

Grid-enhancing technologies (GETs) are expected to be vital for upgrading the transmission system to accommodate higher levels of penetration from renewable energy sources (RES). Proper financial incentives are key to facilitating the deployment of GETs. This paper presents a market model based on co-optimizing GET setpoints alongside generation dispatch in power system operation. The dual variables associated with GET constraints serve as the marginal price for GET operation. GET owners receive payments based on this marginal price and GET setpoints. Proof of revenue adequacy for the proposed market design is presented. Simulation studies on two IEEE test cases show that the market design effectively rewards efficient GET operation and results in substantially higher payments than those from a regulated rate of return. The results suggest that the adoption of a market design, similar to what is presented in this paper, for GETs can lead to GETs proliferation and bring unprecedented levels of efficiency to transmission network utilization. The developed model is linear and scales well for large real-world systems. However, the adoption of the design will require regulatory changes and rulemaking by the Federal Energy Regulatory Agency.