A Market Framework for a 100% Renewable Energy Penetration Spot Market

The global installed capacity of renewable energy sources (RESs) is increasing rapidly. The 100% RESs power supply is being pursued. When renewable energy penetration tends to be 100%, the source-load coordination problem becomes extreme. The problems of market failure caused by the near-zero marginal cost of RESs and the scarcity pricing of flexible resources (FRs) participating in the rapid energy deviation balance need to be solved. Accordingly, a spot market framework including the day-ahead renewable energy temporal capacity market and the real-time energy sharing market is proposed in this paper. The RESs and FRs are decoupled to ensure that the homogenous commodities compete together. In the day-ahead stage, to obtain the locational marginal price with the guiding role of resource allocation, the fixed cost of the RESs is apportioned to obtain the spatial-temporal capacity price. In the real-time stage, a price-driven distributed energy sharing mechanism is proposed. It is proven that the sharing mechanism can achieve optimum social welfare and satisfy incentive compatibility. The simulation verifies that the new framework can solve market failure. The real value of FRs is discovered when a price consensus is reached.

Automated summary

The global installed capacity of renewable energy sources (RESs) is increasing rapidly and the pursuit of 100% RESs power supply raises extreme source-load coordination problems. This paper proposes a spot market framework to solve the market failure caused by near-zero marginal cost of RESs and scarcity pricing of flexible resources (FRs). The framework includes a day-ahead renewable energy temporal capacity market and a real-time energy sharing market, decoupling RESs and FRs to ensure fair competition and achieving optimum social welfare through a price-driven distributed energy sharing mechanism.