Energy procurement in the presence of intermittent sources Jayakrishnan Nair (CWI) Sachin Adlakha (Caltech) Adam Wierman (Caltech)

generation transmission distribution customers utility Small supply side uncertainty Small demand side uncertainty will change with high penetration of renewables

How do we incorporate wind energy? time day ahead real time long term Utility buys power to meet demand

1. Allow wind producers to participate in real time and/or day ahead markets [CAISO PIRP program, Bitar et al. 2011, Cai et al. 2011] time day ahead real time long term Utility buys power to meet demand

2. Utilities form long term contracts with wind producers to buy all available wind for a fixed payment [Meyn et al. 2009, Varaiya et al. 2010, Rajagopal et al. 2011] time day ahead real time long term Utility buys power to meet demand

time day ahead real time long term As renewable penetration increases: 1)Should markets be moved closer to real-time? 2)Should markets be added? This talk: What is the impact of long term wind contracts?

time int. real time long term price ↑ wind uncertainty ↓

time int. real time long term Assumption: wind forecasts evolve independently of the past [Martingale model of forecast evolution, Heath et al. ‘94]

time int. real time long term Objective: minimize average cost of procurement subject to: causality constraints.

Theorem: The optimal procurement strategy is characterized by reserve levels r lt and r in such that where r lt uniquely solves

time day ahead real time long term As renewable penetration increases: 1)Should markets be moved closer to real-time? 2)Should markets be added? This talk: What is the impact of long term wind contracts?

time day ahead real time long term As renewable penetration increases: 1)Should markets be moved closer to real-time? 2)Should markets be added? This talk: What is the impact of long term wind contracts?

Scaling regime time int. real time long term

Procurement with no wind uncertainty extra procurement due to wind uncertainty

Depends on markets & prediction Prices Forecast accuracy Depends on wind aggregation

time day ahead real time long term As renewable penetration increases: 1)Should markets be moved closer to real-time? 2)Should markets be added? This talk: What is the impact of long term wind contracts?

price ↑ wind uncertainty ↓ time int. real time long term Q: Where should the intermediate market be placed to minimize procurement costs?

price ↑ wind uncertainty ↓ time int. real time long term Q: How does the optimal placement change as wind penetration grows?

time day ahead real time long term As renewable penetration increases: 1)Should markets be moved closer to real-time? 2)Should markets be added? This talk: What is the impact of long term wind contracts?

real time long term v/s int. real time long term

time Int. real time long term 2 markets 3 markets Intermediate market disappears

2 markets 3 markets Higher procurement with 3 markets! When can this happen? time Int. real time long term

Forecast error is heavy-tailed to the left

satisfied by the Gaussian dist. When is an additional market beneficial?

As renewable penetration increases: 1)Should markets be moved closer to real-time? 2)Should markets be added? This talk: What is the impact of long term wind contracts? Opt. placement insensitive to increasing penetration Depends on forecast error distribution