A sequential optimization approach for competitive procurement of energy and Ancillary Services

Inderegulated environment, Ancillary Services (AS) plays a vital role, as they are required for reliable and secure operation of the power system. Operating Reserve (OR), as one of the main AS, is a capability of a power system to prevent any unexpected imbalances caused by generation or transmission outage has been considered in this work. This paper considers a flexible disaggregated energy and AS dispatch approach, which can support the development of an effective reserve allocation and pricing methodology. This approach is based on sequential clearing of Energy Market (EM) and Ancillary Service Market (ASM) with the objective of procurement cost minimization. The optimization problem is formulated and solved using Optimal Power Flow (OPF) technique that considers all transmission constraints and power flow limits. In this model, the energy is procured first in EM followed by OR. The procurement of energy and AS using sequential approach has been demonstrated by considering 5 unit test system.