Pricing Randomness, Risk and Flexibility: Market Design For a Smarter Grid
Nathan Dahlin – University of Illinois Urbana-Champaign
Abstract: The current moment finds the world’s energy infrastructure at the threshold of rapid transformation. Today’s power systems are defined by increasing penetration of renewable and distributed energy resources on the supply side, and the emergence of flexible loads on the demand side. Clearly, market institutions have a crucial role to play in this transformation as well. Through market analysis, design and optimization, this talk will explore how such institutions can evolve to address four key characteristics of modern power systems: uncertainty, risk, flexibility and strategic behavior.
First, given that user flexibility is considered one of the most valuable, yet still untapped resources available for accommodating the transition to renewables, an explicit market for flexibility is designed and analyzed. Users report preferences for service over a finite time horizon to a scheduler which shapes the aggregate demand profile to the output of a renewable generator, while minimizing the costs associated with resorting to thermal generation. Social welfare properties of competitive equilibria and an accompanying mechanism are studied. As the competitive equilibria arise from a convex relaxation of the binary constrained load scheduling problem, an interpretation of equilibrium schedules as giving a stochastic method for generating an optimal schedule in the large economy limit is also examined. Next, focusing on the transmission component of the power grid, rather than arrange advance supply and account for real time imbalances in supply and demand separately, a two-stage, stochastic market clearing paradigm is considered. Probabilistic information regarding renewable generation is used to couple day ahead and expected real time recourse decisions, increasing efficiency. A two-stage mechanism is developed for a two-sided exchange with primary and ancillary generation and demand response, implementing a sequential competitive equilibrium (SCEq). Allowing for strategic behavior, sufficient conditions are provided for the existence of efficient sequential Nash equilibria.
Biography: Nathan Dahlin received the B.S. and M.S. degrees in electrical engineering in 2008 and 2020, respectively, and the M.A. degree in applied mathematics in 2020 from the University of Southern California (USC), Los Angeles, CA, USA. In 2021 he completed the Ph.D degree in electrical engineering at USC, under advisement of Prof. Rahul Jain. From 2008 to 2015 he worked as a research and development engineer at Audyssey Laboratories in Los Angeles. He is currently a postdoctoral research associate at the University of Illinois Urbana-Champaign, under advisement of Prof. Subhonmesh Bose.
Host: Pierluigi Nuzzo
Center for Cyber-Physical Systems and the Internet of Things (CCI) http://cci.usc.edu
Center for Autonomy and AI (AAI) https://aai.usc.edu
Ming Hsieh Institute for Electrical and Computer Engineering (MHI) http://mhi.usc.edu