Modeling of Operating Reserve Demand Curves and System-Level Price Adders in Real-Time Energy-Only Market

In order to support an appropriate level of resource adequacy in the long term and also to achieve a reliable operation in the short term, a new pricing design and mechanism is needed as a key success factor of real-time energy-only market. This paper proposes optimization-based mathematical models to explore operating reserve demand curves (ORDCs) and two price adders in real-time energy-only market, including dispatch correction and extended security-constrained economic dispatch. The Lagrangian multipliers of the dispatch correction problem are used to construct the ORDCs. Then, the derivative of the ORDCs’ social welfare is formulated as real-time online reserve price adders such as the scarcity adder and the price-lift adder. In case studies, we justify the effectiveness of the proposed ORDCs and two price adders by a simple example with two aggregated units and the Electric Reliability Council of Texas data.