Coordinated optimal strategic demand reserve procurement in multi-area power systems

With renewable energy sources becoming an ever-increasing share of the generation mix of modern power systems, having the proper amount of reserve becomes of utmost importance to ensure the short-term as well as the long-term adequacy level in the system. This reserve can be in the form of generation assets or it can be provided from assets on the demand side. The contribution that these resources make to the adequacy of the system is referred to as their capacity credit. This paper derives a methodology for calculating the capacity credit of a resource in a multi-area system. Based on that, an approach is developed that quantifies how strategic demand reserve should be distributed between power system areas in a multi-area system in order to reach individual long-term reliability targets in all areas. Lastly, an algorithm is derived that optimizes the coordinated procurement of multi-area strategic demand reserve by counterbalancing the value of lost load against the costs related to maintaining generation adequacy. A combination of an iterative multi-variate gradient approach and a Monte Carlo simulation with an efficient sensitivity analysis allows this to be achieved in a computationally economical way. An illustrative example and numerical simulations of test systems using real data from the Nordic power system demonstrate the effectiveness of the proposed approach.