Resource Adequacy in Electricity Markets With Renewable Energy

This paper presents a market-based resource adequacy assessment framework to analyze the system generation portfolio that results in a competitive market environment. In particular, we apply the modeling framework to investigate the impact of high penetration levels of variable renewable energy resources and different market designs on achieving resource adequacy. The model captures the strategic capacity investment and retirement decision-making of profit-maximizing generation companies. In contrast to many previous studies, this paper considers markets for capacity, energy, and reserve products in detail; thus, the modeling framework allows improved analysis of generation expansion and revenue sufficiency in a competitive market environment. The modeling framework is based on Stackelberg leader-follower games and is formulated as a bi-level optimization problem, which is then transformed into a mathematical program with equilibrium constraints. Furthermore, we employ a Lagrangian decomposition algorithm to enhance computational performance. In a case study of the electric reliability council of texas (ERCOT) system, we compare the results from the proposed model with those obtained from a traditional centralized least-cost planning model. The results demonstrate the effectiveness of the proposed modeling framework and highlight the importance of considering strategic behavior in a competitive market framework when assessing resource adequacy.