Penalizing source uncertainty in wholesale electricity markets

Many renewable energy sources are intermittent. The DC optimal power flow method used by wholesale markets for economic dispatch and energy pricing provides no way of evaluating the worth of such sources. We propose that the bids of the intermittent sources include uncertainty levels as well as energy prices, and develop, for radial distribution networks, a new probabilistic version of the DC OPF problem that bears the same structure but penalizes intermittency. The new problem is solved for several instances of the IEEE 32 node radial network. It is shown that the probabilistic approach correctly captures many economic and operational effects of source uncertainty. While fixed energy sources have a greater value at distant locations, intermittent energy sources are better near fixed energy sources that can compensate their power fluctuations.