Customer choice of reliability in spinning reserve procurement and cost allocation using well-being analysis

A novel pool-based market-clearing algorithm for spinning reserve (SR) procurement and the cost allocation associated with provision of spinning reserve among customers (DisCos) is developed in this paper. Rational buyer market model is used to clear energy and spinning reserve markets in the proposed algorithm. This market model gives DisCos the opportunity to declare their own energy requirement together with their desired reliability levels to the ISO and also they can participate in the SR market as a interruptible load. The DisCos' desired reliability levels are selected from a hybrid deterministic/probabilistic framework designated as the system well-being model. Using the demand of each DisCo and its associated desired reliability level, the overall desired system reliability level is determined. The market operator then purchases spinning reserve commodity from the associated market such that the overall desired system reliability level is satisfied. A methodology is developed in this paper to fairly allocate the cost associated with providing spinning reserve among DisCos based on their demands and desired reliability levels. An algorithm is also presented in this paper for implementing the proposed approach. The effectiveness of the proposed technique is examined using the IEEE-RTS. (C) 2009 Elsevier B.V. All rights reserved.