Reserve Cost Allocation Mechanism in Renewable Portfolio Standard-Constrained Spot Market

Governments have been taking policy instruments to enhance green power (GP) development, while the renewable portfolio standard (RPS) has become one of the most prevalent choices. Although RPS can guarantee GP producers’ income and expansion from a medium to long term perspective, curtailments are still inevitable, as RPS is integrated to power system by financial contracts and cannot affect market clearing. To solve this problem, the paper modifies the clearing procedure with a physical contract-based RPS restriction. However, along with that, reserve cost allocation mechanisms (RCAMs) ignoring RPS obligations are no longer cooperative, since GP penetration and market reserve demands are partially determined by RPS obligations now. Thus, an innovative RCAM, dominated by both net loads and RPS obligations through reserve costs contribution rate (RCCR) is proposed. A tri-level model is formulated to evaluate modifications and the proposed RCAM. On the first level, RCCR is achieved by calculating the incremental ratio of system reserve costs from level-1 without RPS constraint to level-3 with RPS constraint. The lower two levels form a classic bi-level model, where energy users interact with the independent system operator by strategical investment in distributed energy resources. Case studies based on the IEEE 6- and 118-bus system demonstrate the effectiveness of the proposed RCAM.