Working paper
Market design for system security in low-carbon electricity grids: from the physics to the economics
- Abstract:
- System security is a critical component of power system operation. The objective of operational security is to manage grid stability and to limit the interruption to customer service following a disturbance. The integration of inverter-based renewable generation technologies such as solar and wind in the generation mix has introduced new challenges for managing operational security. First, the intermittency inherent in renewable resources can impact on key power system parameters such as frequency and voltage. Second, renewables interface with the grid through power electronics rather than turbines, which means that the physical characteristics of turbine generation that have historically supported the stability of the grid are becoming scarce as the power system transitions away from fossil‑fuel based thermal generation. In this paper, using public good theory, we provide an economic characterisation of the system services necessary for power system security. The analysis illustrates that, as opposed to a standard ‘public goods’ characterisation, system security products are better viewed as a basket of goods with differing economic characteristics that can also vary over space and time. The implications of these classifications for market design is analysed, including the inseparability of certain products, the binary or unit-commitment based nature of certain products, and the interactions between procurement mechanisms, network access rights and investment. Finally, we highlight five emerging models of market design for system security that reflect the nuances of economic characterization while respecting the physical characteristics of the grid.
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- Publisher copy:
- 10.26889/9781784671600
Authors
- Publisher:
- Oxford Institute for Energy Studies
- Series:
- OIES paper
- Series number:
- EL 41
- Place of publication:
- Oxford
- Publication date:
- 2020-06-17
- DOI:
- ISBN:
- 9781784671600
- Language:
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English
- Keywords:
- Deposit date:
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2020-08-07
Terms of use
- Copyright holder:
- Oxford Institute of Energy Studies
- Copyright date:
- 2020
- Rights statement:
- Copyright © 2020 Oxford Institute for Energy Studies (Registered Charity, No. 286084). This publication may be reproduced in part for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgment of the source is made. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the Oxford Institute for Energy Studies.
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