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Effect of Loss of Load Probability Distribution On Operating Reserve Demand Curve Performance in Energy-Only Electricity Market
Effect of Loss of Load Probability Distribution On Operating Reserve Demand Curve Performance in Energy-Only Electricity Market
Effect of Loss of Load Probability Distribution On Operating Reserve Demand Curve Performance in Energy-Only Electricity Market
Manuscript received December 7, 2019; revised: February 16, 2020. Dr. Xuewei Zhang is with the Department of Electrical Engineering and
Sreelatha Aihloor Subramanyam is a Ph.D. candidate within the Sustainable Computer Science at Texas A&M University-Kingsville, Kingsville, Texas
Energy Systems Engineering Program at Texas A&M University-Kingsville, 78363, USA (email: xuewei.zhang@tamuk.edu)
Kingsville, Texas 78363, USA (email: sreelatha.aihloor_subramanyam@
students.tamuk.edu).
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increase ORDC price, [9] discusses the rightward shift of the the reserve errors during hours 7-10 and during summer 2018
normal distribution of LOLP. Currently, ERCOT uses a shift by against normal distribution. A clear departure from normality
0.25 of the standard deviation. From a theoretical point of view, (straight dot-dashed line) is observed. Using software Easyfit,
its justifiability remains an issue. Practically, it is of interest and the best-fitted distribution for both sets of data is found to be
relevance to gain quantitative knowledge on how the shift will the general extreme value (GEV) distribution, as shown in Fig.
affect the ORDC performance. Our recent work demonstrates a 1(c-d). Further, 3 GOF tests (Kolmogorov-Smirnov, Anderson-
dynamic simulation framework that serves for the purpose [10]. Darling, and ߯ ଶ ) on if the data obey normal distribution (null
Therefore, the objectives of this work are to (i) test how well hypothesis) are conducted [11]. In the 24 data sets, the tests of
the LOLP fits into a normal distribution, (ii) identify probability all but two reject the null hypothesis (the 2 exceptions are Fall
distributions that have better agreement with data, and (iii) use Hours 7-10 and Spring Hours 23-24-1-2). Ranked by the K-S
the aforementioned dynamic simulations to examine the effect test p-values of 30 distributions, there are 8 best fits that are log-
of the choice of LOLP distributions on ORDC performance. logistic, 4 GEV, 3 general gamma, 3 Weibull, 2 normal, among
Our main contributions include (a) the introduction of various others. The comparisons of log-logistic and normal distribution
statistical tests, which generates new insights on the distribution ranks in Fig. 2 also show that, in most cases, normal distribution
of LOLP, and (b) the evaluation of the long-term performance does not have best the agreement with the data.
of ORDC, which shows the promise of replacing shifted normal
distribution with other distributions. The models and methods
used in this study are described in Sec. II, where we also analyze
data to address objectives (i) and (ii). Sec. III presents some
ORDC simulation results to discuss the effect of distributions
of LOLP. Conclusions are drawn in Sec. IV.
The forecast peak load (LF,Y+i) for the ith year into the future is
estimated from LA,Y using annual growth rate rL. (ii) Given the
previous year’s installed capacity ICAP<í, the new capacity
addition before this year NCAYí1, and the annual plant retiring
rate PR, then ICAPY = NCAYí1 + (1–PR)·ICAP<í. The forecast
ICAPY+i is assumed to increase at annual growth rate r L. (iii)
From the ORDC constructed following [5,6], the price adder
ǻȆk is derived at the reserve levels (Rk = ICAPk í Lk) for each
year during the 8-\HDUSHULRG N <í<í,…, Y+3): οߎ ൌ
ሺܸܱ ܮܮെ ܲܯܮሻ ሺܴ െ ܺ) (in $/MWh). (iv) To estimate the
increased revenue of a benchmark generator from ORDC, we Fig. 3. IRM (mean of 1000 samples) over 50 years under different ER values.
PXOWLSO\ǻȆk with the recorded reserve usage ER (in MWh) in
one year. In principle, the annual ORDC revenue should be the Now with ER = 5 MWh, we run simulations to study how the
accumulation of all hourly ORDC revenues. There are 2 reasons LOLP distributions affect the IRM dynamics. The results in Fig.
that in this work we simply use a yearly-averaged price adder. 4(a) show that all other distributions will establish a raised IRM
Firstly, only the data of monthly totals of reserve usage can be level from that of the normal distribution, with log-logistic
found on public records, and we currently do not have hourly being the closest and Weibull being the highest. In this work,
reserve usage info. Secondly, since the real-time reserve levels we use the same LOLP distribution throughout the 50 years. No
in the future years are unknown, the yearly average of reserve TBs or updates of the distribution are included. Nevertheless,
levels is used to evaluate the ORDC price adder for each year. the objective is to shed light on how different interpretations of
(v) Given its annualized fixed cost (FC) and the gross margin reserve errors may impact the IRM in the long run. ERCOT is
(GM) from the E/AS market, the generator’s profit each year is implementing normal distribution with a rightward shift to
߶ ൌ ܯܩ οߎ ή ܧோ െ ܥܨ . (vi) Use the ߶ ’s to calculate
increase the ORDC price. The results of the shifted normal
risk-adjusted forecast profit (RAFP) following [12]. If RAFPY
distributions are also plotted in Fig. 4(a). In comparison, using
0, then NCAY = rL · ICAPY. As the peak load grows annually,
an alternative LOLP distribution can accomplish the same (see
NCAY is required to increase the installed capacity by rL. If
RAFPY > 0, NCAY will increase linearly with RAFPY until the cases of shifted by 1.5 standard deviations and GEV or
reaching a pre-defined upper limit. More model details and general gamma), while being more statistically sound.
parameter settings are specified in [10], a preliminary work of
ours devoted to building and validating the model which is self-
consistent and can be used for accomplishing our objectives. It
is also worth noting that the model, although similar to Monte
Carlo method, does not involve any uncertainty in initial inputs
like IRM. With the future demand information being generated
stochastically, we average the results from multiple iterations
/ZD
IV. CONCLUSIONS
In conclusion, this work studies the LOLP distribution fitted
from historical data of reserve errors in ERCOT and examines
the effect of the LOLP distributions on the ORDC’s long-term
performance. The statistical tests show that normal distribution
is not the best fit in most cases. The simulation results of a self-
consistent model indicate that different probability distributions
used in ORDC can lead to different IRMs, implying that it may
not be necessary to shift the normal distribution to increase the
ORDC payments to ensure targeted IRMs. With the availability
of more data, future work can be done to improve and calibrate
the model for simulations at higher time resolutions.
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