Equilibrium Analysis of Microgrids in Renewable Portfolio Standard-Constrained Spot Markets

Governments around the world are adopting policy instruments aiming at enhancing renewable energy (RE) development, while the renewable portfolio standard (RPS) has become one of the most prevalent and effective choices. Although RPS, which contains financial contracts, guarantees green electricity (GE) producers’ profit, GE curtailments are inevitable because RPS cannot affect economic dispatch physically. To solve this problem, an equilibrium analysis of microgrids (MGs) in RPS constrained spot markets is proposed in this paper. Distinguished from the existing literature, a bi-level market equilibrium framework to evaluate the impacts of RPS on GE generation is proposed in this paper. On the upper level, an optimal bidding strategy for MGs across the power grid is formulated. The strategy aims to minimize the operating cost anticipating day-ahead locational marginal prices (LMPs) and apportioned reserve costs (ARCs), while respecting RPS requirements and other individual constraints of distributed energy resources (DERs). On the lower level, an independent system operator collects the bids from all MGs, by which the joint energy and reserve markets containing the physical contracts of RPS is cleared. A diagonalization algorithm is used to solve the bi-level model. Case studies based on the IEEE-14 bus system with 3 conventional generators, 2 wind farms and 5 microgrids validate the effectiveness of the proposed bi-level model. Meanwhile, an additional equilibrium analysis is developed to facilitate a better understanding of how the RPS constraint works in case studies as well.