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Title:

Mobilizing Demand Flexibility in Wholesale Electricity Markets with VPP Supply Functions

Abstract:

FERC Order 2222 requires ISOs to develop market mechanisms that will enable aggregators of distributed resources to participate in the electricity wholesale market. In this work we describe the construction of a supply function for an aggregator’s virtual power plant (VPP) based on a portfolio of curtailable devices, categorized into priority tranches, that are controlled by the aggregator through edge technology behind the meter. Only the nameplate capacity of the curtailed devices are known to the aggregator while the energy yield from curtailment is uncertain. However, the supply function of the VPP offered by the aggregator into the wholesale market must specify deliverable energy quantity as function of wholesale price, like any other generator. We employ a revenue management methodology to construct a supply function with controlled delivery risk, based on priority tranches of the curtailed devices and offline estimates of the energy yield probability distributions. This work is part of an ARPA E project aimed at implementing a VPP based on aggregated demand curtailments at PJM.

(Joint work with Hung Po Chao, ETA and Alex Papalexopoulos, ZOME)

Bio:

Dr. Shmuel S. Oren is Professor of the Graduate School in the Department of Industrial Engineering and Operations Research at UC Berkeley and is a co-founder and the Berkeley site director, of PSerc. He has been a member of the California ISO Market Surveillance Committee and a consultant to many private and public entities in the US and abroad. He holds a Ph.D in Engineering Economic Systems from Stanford University. He is a recipient of the INFORMS Hotelling Medal for life time achievement in Energy Natural Resources and Environment and the IEEE Outstanding Power Systems Educator Award. He is a Member of the US National Academy of Engineering, a Life Fellow of the IEEE and Fellow of INFORMS.