Centralized volatility reduction for electricity markets

Increased penetration of wind energy will make electricity market prices more volatile. As a result, participants bear increased financial risks, which impact investment decisions and in turn, makes it harder to achieve sustainable goals. remedy, this paper, we propose an insurance that complements any wholesale design. Our mechanism can be run by suitable entity such as independent system operator, with the aim reducing impacts volatile prices. We provide theoretical guarantees, analytically characterize outcomes over copperplate power example, numerically explore same for modified IEEE 14-bus test system.