Balancing wind intermittency using hydro reserves and demand response

This paper examines a proposal for firming wind turbine generation by using hydraulic storages associated with a chain of hydro generators on a river and demand response. It proposes a market for energy imbalance to counteract primarily intermittency of wind and solar generations. Fast responding resources e.g. hydro generation, pumped hydro, energy storage devices (batteries, hydrogen, fly-wheels), and demand response, will submit offers in this proposed “Balancing Market” for their products and services in terms of time, MW, $/MWH, and duration. This paper supposes that wind generators offer as a firm capacity product into the wholesale electricity market. An algorithm is presented to determine the hydro-wind-DR operating strategy for 24 hours; ahead of real-time operations in order to minimize cost or maximize the generator's profit. The algorithm uses i) hydro generation from the small storages in a river chain to mitigate the wind generation variability, ii) Demand response (DR) and iii) variable penalty prices in the objective function to incentivize combined hydro, wind and DR to minimize the deviation from a committed schedule and iv) environment constraints on hydrology. The discussion in this paper is based around New Zealand Electricity Market (NZEM).