Provision of Differentiated Reliability Services Under a Market-Based Investment Decision Making

Along with the modernized grids, a transactive energy concept has been developed to enhance the efficiency in managing grids through a market-based approach. This paper proposes a market-based approach with the process of service price settling that is required only the necessary information in the form of bid functions to provide differentiated reliability service under the considered market structure. Decisions about investments and the prices to charge for services are made based on information from a service provider and customers by optimizing its objective with respect to its own interests. The numerical simulation shows that customers can obtain the higher reliability services according to their willingness to pay.