Price-based adaptive spinning reserve requirements in power system scheduling

In a deregulated electricity market such as the California WEPEX, spinning reserves must be explicitly identified as an ancillary service and priced. Additionally, scheduling coordinators who match suppliers and demands may either self-provide spinning reserves, or rely on the Independent System Operator (ISO) to provide reserves at the spot price. The deregulated market structure makes explicit the implicit softness that has always been recognized in the reserve constraints: additional reserves may have value even when a minimum reserve requirement has been met. In this paper we formulate the spinning reserve requirement (SRR) as a function of the endogenously determined marginal values of reserves. The spinning reserve requirement depends, according to a non-increasing response function, on a price/value signal. We present three power system scheduling algorithms in which this price/value signal is updated at each iteration of a dual optimization. Game theory is used to interpret the proposed algorithms. Numerical test results are also presented. 1998 Elsevier Science Ltd. All rights reserved.