Market design, slinkies, and synchronous condensers w/ Farhad Billimoria and Conleigh Byers, PhD

learning lessons about deeply decarbonized electricity markets from around the world including optimal prices in non-convex markets, reliability insurance, and system security

UPDATE: Friends-of-the-Underground discovered that the original link to the YouTube video did not have the full recording. Sorry for the error.

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Farhad Billimoria, Conleigh Byers, PhD, Ahlmahz Negash, PhD, and Paul Dockery discuss adaptation of market design for the energy transition including fat tails and increased exposure to extremes; batteries and price responsive demand; natural gas fragility and marginal pricing; and inverter-driven resources and system security. Then the team plays a new game where they synthesize expert explanations of convex vs non-convex pricing and reliability insurance.

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05:35 - Lessons Learned on deeply decarbonized electric systems from electricity markets around the world with “Handbook on Electricity Markets” and P.L. Joskow’s “From hierarchies to markets and partially back again in electricity: responding to decarbonization and security of supply goals” as background

07:13 - Lesson 1: natural gas fragility and marginal pricing

17:27 - Lesson 2: batteries and price responsive demand

24:31 - Lesson 3: fat tails and increased exposure to extremes

38:27 - Lesson 4: Inverter based grids and system security (synchronous condensers and grid inertia)

48:22 - Wonky energy game synthesizing expert explanations

• Farhad Billimoria provides a 2 minute 20 second explanation of A reliability insurance overlay on energy-only electricity markets¹; followed by the rest of the crew’s interpretation

• Conleigh Byers, PhD, provides a 2 minute 20 second explanation of Long-run optimal pricing in electricity markets with non-convex costs²; followed by the rest of the crew’s interpretation (and discussion of computational time for a solution using the Convex Hull pricing³⁴)

1:27:45 - Ahlmahz’s insightful question of the week

1:32:36 - Conleigh Byers, PhD’s Closing Thoughts

Public Power Underground, for electric utility enthusiasts! Public Power Underground, it’s work to watch!

1. Farhad Billimoria, Rahmatallah Poudineh, Market design for resource adequacy: A reliability insurance overlay on energy-only electricity markets, Utilities Policy, Volume 60, 2019, 100935, ISSN 0957-1787, https://doi.org/10.1016/j.jup.2019.100935.

2. Conleigh Byers, Gabriela Hug, Long-run optimal pricing in electricity markets with non-convex costs, European Journal of Operational Research, Volume 307, Issue 1, 2023, Pages 351-363, ISSN 0377-2217, https://doi.org/10.1016/j.ejor.2022.07.052.

3. P. Andrianesis, D. Bertsimas, M. C. Caramanis and W. W. Hogan, "Computation of Convex Hull Prices in Electricity Markets With Non-Convexities Using Dantzig-Wolfe Decomposition," in IEEE Transactions on Power Systems, vol. 37, no. 4, pp. 2578-2589, July 2022, doi: 10.1109/TPWRS.2021.3122000.

4. C. Byers and G. Hug, "Flexibility Compensation with Increasing Stochastic Variable Renewable Energy in Non-Convex Markets," 2022 17th International Conference on Probabilistic Methods Applied to Power Systems (PMAPS), Manchester, United Kingdom, 2022, pp. 1-6, doi: 10.1109/PMAPS53380.2022.9810627.