Substitute energy price market mechanism for renewable energy power system with generalized energy storage

Incompatibility of current electricity market mechanisms based on locational marginal price (LMP) become prominent in power systems with increasing renewable energy (RE) and generalized energy storage (GES), resulting in soaring electricity prices, high costs of balancing RE, etc. To fundamentally solve this problem, we propose a novel substitute energy price (SEP) market mechanism, compatible with objective market value, new supply-demand relationship and nature of continuous power balance of RE power systems. SEP, reflecting market value of per-unit substitute energy, is discovered for the first time, and thus energy curves can be traded as substitutes at vector level. Based on designed regulation responsibility mechanism, any entity, especially RE generator, can transform its energy curve with regulation demands into substitute by indirect payment. To supply these regulation demands generated by REs and loads, regulation energy is proposed as independent tradable commodities with quantitative market value to adapt to GESs and dispatchable generators. Numerous experiments indicate SEP mechanism overcomes major deficiencies of existing LMP mechanism, provides a level playing field for all energy and regulation resources, promotes construction of GESs and helps improve global social welfare and relieve duck-curve problem. This work will be instrumental in the transformation of current power systems to carbon-neutral RE power systems.

Automated summary

This study proposes a new substitute energy price market mechanism to address the incompatibility of current electricity market mechanisms. By introducing a substitute energy price, energy curves can be traded as substitutes, and regulation energy is introduced as tradable commodities to adapt to the needs of renewable energy and energy storage.