A statistically robust payment sharing mechanism for an aggregate of renewable energy producers

TitleA statistically robust payment sharing mechanism for an aggregate of renewable energy producers
Publication TypeConference Paper
Year of Publication2013
AuthorsAshutosh Nayyar, Kameshwar Poolla, Pravin Varaiya
Conference Name2013 European Control Conference
Date Published07/2013
Conference LocationZurich, Switzerland
Keywordselectricity markets, reliability and markets, renewables, RM11-006

Variability of supply is a fundamental difficulty associated with renewable resources in the electricity market. One way of mitigating this difficulty is to aggregate a diverse collection of resources in order to exploit the negative correlations that may exist among them. We consider an aggregation scheme where individual renewable energy producers offer day-ahead contracts to an aggregate manager which in turn participates in a two stage electricity market. The net payment received by the aggregate manager from the market has to be fairly distributed among the participants in the aggregate. Since the actual power supplied by the aggregate is random, the net payment it receives is also random. The problem of sharing this random payment is complicated by the fact that different participants may have different statistical models for the payment because they have different statistical models for their and other producers' net generation. We propose a simple payment sharing mechanism that is independent of the statistical models of the participants. We show that our payment sharing mechanism ensures that individual producers are better off in the aggregate than on their own. Further, under certain conditions, aggregation provides the social benefit of increasing the amount of renewable energy available in the day-ahead market.