Search

This paper investigates different reserve issues inspired by the European situation, focusing on both the moment when reserves are procured and the degree of coordination among Transmission System Operators (TSOs) in that procurement. We present three scheduling models formulated as stochastic programs that represent the day-ahead energy market, the reserve procurement, and the real-time balancing market in a renewable-dominated power system. Two of the proposed models are inspired by reserve procurement mechanisms currently applied in Europe, where reserves are committed either before (Model 1) or after (Model 2) the clearing of the day-ahead energy market. Then, we use as benchmark a third model in which energy and reserve capacity are co-optimized (Model 3). In all models, we consider the procurement of both conventional and upward/downward reserves. We also assess the impact of these organizations on market participants’ remuneration and test the impact of cross-border constraints as those applying in the European power system. The case study is based on the IEEE 24-node RTS, considering the uncertainty in renewable power production and demand. Our results show that Model 1 is the least efficient market design as it leads to a misallocation of the available capacity, while Model 2 becomes as efficient as Model 3 when the TSOs procure reserve in a coordinated way. Finally, a coordinated procurement of reserves reduces the system operating costs in all models.

Government involvement in managing domestic prices of energy and other commodities is a major issue in emerging economies. We examine one aspect of the problem, price controls, when governments set or cap prices. We show how a Mixed Complementarity Problem (MCP) formulation can be used to model and assess the impacts of price controls in multi-sector economic-equilibrium models. Both the gains from deregulation and the consequences of imposing new or altering existing regulations can thus be measured. We present three distinct models that capture different price-control situations: firms have to meet demand and receive an implicit subsidy, demand rationing occurs due to an associated price control constraint, and subsidies limit demand rationing. We present an approach to measuring the effects on the equilibrium in the first case and the levels of disequilibrium induced by price controls in the other cases. We also show how to determine the most efficient allocation program when a government engages in rationing. We illustrate the cases described by these models using markets that have or had price controls.