Strategic Demand-Side Response to Wind Power Integration

This paper explores the effects of allowing large, price-responsive consumers to provide reserves in a power system with significant penetration of wind energy. A bilevel optimization model represents the utility maximization problem of a large consumer, subject to a stochastic day-ahead co-optimization of energy and reserves that a system operator would solve to clear the market while considering wind power uncertainty. An examination of the market outcomes from both an illustrative and a large-scale study using this model allows analysis of a) the effects of the type of behavior of the large consumer (i.e., strategic vs competitive), b) limits on the amount of reserves it is allowed to provide, and c) variability and accuracy of characterization of wind power uncertainty.