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Long-Term Resource Adequacy, Long-Term Flexibility Requirements, and Revenue Sufficiency

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Electricity Markets with Increasing Levels of Renewable Generation: Structure, Operation, Agent-based Simulation, and Emerging Designs

Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 144))

Abstract

Variable generation (VG) can reduce market prices over time and also the energy that other suppliers can sell in the market. The suppliers that are needed to provide capacity and flexibility to meet the long-term reliability requirements may, therefore, earn less revenue. This chapter discusses the topics of resource adequacy and revenue sufficiency—that is, determining and acquiring the quantity of capacity that will be needed at some future date and ensuring that those suppliers that offer the capacity receive sufficient revenue to recover their costs. The focus is on the investment time horizon and the installation of sufficient generation capability. First, the chapter discusses resource adequacy, including newer methods of determining adequacy metrics. The chapter then focuses on revenue sufficiency and how suppliers have sufficient opportunity to recover their total costs. The chapter closes with a description of the mechanisms traditionally adopted by electricity markets to mitigate the issues of resource adequacy and revenue sufficiency and discusses the most recent market design changes to address these issues.

This chapter is based on the detailed discussion of existing and evolving market designs to ensure resource adequacy and revenue sufficiency to meet the increased needs from variable generation [1, Sect. 3].

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Notes

  1. 1.

    For example, SPP uses 2.4 h/y, which results in a lower reserve margin than 0.1 LOLE (see Astrape Consulting [3]).

  2. 2.

    For the discussion, we ignore the possibility of wind/solar curtailment. In reality, some limited curtailment or downward dispatch may help achieve economic and/or reliable system operation.

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Author information

Authors and Affiliations

  1. Electric Power Research Institute, Palo Alto, CA, 94304, USA

    Erik Ela

  2. National Renewable Energy Laboratory, Golden, CO, 80401, USA

    Michael Milligan, Aaron Bloom & Aaron Townsend

  3. Argonne National Laboratory, Argonne, IL, 60439, USA

    Audun Botterud & Todd Levin

Authors
  1. Erik Ela
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  2. Michael Milligan
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  3. Aaron Bloom
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  4. Audun Botterud
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  5. Aaron Townsend
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  6. Todd Levin
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Correspondence to Erik Ela .

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Editors and Affiliations

  1. National Laboratory of Energy and Geology, Lisbon, Portugal

    Fernando Lopes

  2. University of Lisbon, Lisbon, Portugal

    Helder Coelho

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Ela, E., Milligan, M., Bloom, A., Botterud, A., Townsend, A., Levin, T. (2018). Long-Term Resource Adequacy, Long-Term Flexibility Requirements, and Revenue Sufficiency. In: Lopes, F., Coelho, H. (eds) Electricity Markets with Increasing Levels of Renewable Generation: Structure, Operation, Agent-based Simulation, and Emerging Designs. Studies in Systems, Decision and Control, vol 144. Springer, Cham. https://doi.org/10.1007/978-3-319-74263-2_6

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  • DOI: https://doi.org/10.1007/978-3-319-74263-2_6

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