Auction markets for dispatchable power: How to score the bids |
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Authors: | Steven Stoft Edward P. Kahn |
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Affiliation: | (1) Lawrence Berkeley Laboratory University of California, 1 Cyclotron Road, 94720 Berkeley, CA |
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Abstract: | Competitive bidding for electric generating capacity is becoming based on economic dispatch rather than the PURPA must-take norm. Incorporating economic dispatch into bidding requires different price scoring procedures. The avoided cost of a dispatchable project is determined by the energy price offered. Price scoring methods based on a percentage of avoided cost approach are uneconomically biased against baseload projects, because they neglect the duration effects of their dispatch. This bias is illustrated in a simple model of economic dispatch. A number of utilities use the percentage of avoided cost method for dispatchable capacity. They can correct the bias by using a net benefits per kW measure of economic value. |
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