Day‐Ahead Scheduling: Reserve Determination and Valuation

In power system operations, reserves are traditionally used to restore the balance between power supply and demand after a power system equipment failure or emergency. Reserves are procured by the system operator as mandated by the regulator. It is important to note that reserves are normally provided by non‐stochastic units that produce energy. Reserve and energy are different commodities provided by the same production facilities: the generators. This chapter provides an overview on how to optimally procure reserves using both stochastic programming and robust optimization procedures. As the stochastic production units take up a growing share in the electricity production mix, it becomes more important for the Regional Transmission Organizations (RTOs) to better model the stochasticity and accordingly procures reserves. As a result, stochastic programming and robust optimization procedures are particularly well motivated in reserve determination. The chapter analyzes the way in which reserve needs and reserve cost increase with renewable integration and renewable variability.