Abstract
In this paper we first review the method of computing Loss of Load Probability (LOLP) as a means of assessing reliability. Then, we relate the method to the Installed Capacity (ICAP) mechanisms, which are currently being implemented in some regional US electricity markets as a necessary market process for ensuring long term reliability. The basic conclusion of the paper is that the current ICAP mechanisms do not accurately ensure a desired level of reliability, as intended. The reason for this situation is because the current ICAP mechanisms consider the expected value of available generation, which is only the first order simplification of probabilistic generator capacity modeling, while ignoring the second and higher orders. We use simple examples to illustrate this claim and its implications. The incentives created through ICAP mechanisms directly impact the investment decisions of new generation and transmission. Therefore, the findings presented in the paper are critical as we move forward with the restructuring process. To achieve the desired level of reliability through market process, this paper may lead to understanding better the necessary modifications to the current ICAP mechanisms.
| Original language | English |
|---|---|
| Title of host publication | Proceedings of the IEEE Power Engineering Society Transmission and Distribution Conference |
| Pages | 830-835 |
| Number of pages | 6 |
| Volume | 2 |
| Edition | SUMMER |
| Publication status | Published - 2002 |
| Event | 2002 IEEE Power Engineering Society Summer Meeting - Chicago, IL, United States Duration: Jul 21 2002 → Jul 25 2002 |
Other
| Other | 2002 IEEE Power Engineering Society Summer Meeting |
|---|---|
| Country | United States |
| City | Chicago, IL |
| Period | 7/21/02 → 7/25/02 |
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Keywords
- Electric Power Industry Restructure
- Loss of Load Probability (LOLP)
- Market Mechanisms
- Power System Reliability
ASJC Scopus subject areas
- Engineering(all)
- Energy(all)
Cite this
Study of loss of load probability in designing installed capacity market. / Yoon, Yong T.; Felder, Frank.
Proceedings of the IEEE Power Engineering Society Transmission and Distribution Conference. Vol. 2 SUMMER. ed. 2002. p. 830-835.Research output: Chapter in Book/Report/Conference proceeding › Conference contribution
}
TY - GEN
T1 - Study of loss of load probability in designing installed capacity market
AU - Yoon, Yong T.
AU - Felder, Frank
PY - 2002
Y1 - 2002
N2 - In this paper we first review the method of computing Loss of Load Probability (LOLP) as a means of assessing reliability. Then, we relate the method to the Installed Capacity (ICAP) mechanisms, which are currently being implemented in some regional US electricity markets as a necessary market process for ensuring long term reliability. The basic conclusion of the paper is that the current ICAP mechanisms do not accurately ensure a desired level of reliability, as intended. The reason for this situation is because the current ICAP mechanisms consider the expected value of available generation, which is only the first order simplification of probabilistic generator capacity modeling, while ignoring the second and higher orders. We use simple examples to illustrate this claim and its implications. The incentives created through ICAP mechanisms directly impact the investment decisions of new generation and transmission. Therefore, the findings presented in the paper are critical as we move forward with the restructuring process. To achieve the desired level of reliability through market process, this paper may lead to understanding better the necessary modifications to the current ICAP mechanisms.
AB - In this paper we first review the method of computing Loss of Load Probability (LOLP) as a means of assessing reliability. Then, we relate the method to the Installed Capacity (ICAP) mechanisms, which are currently being implemented in some regional US electricity markets as a necessary market process for ensuring long term reliability. The basic conclusion of the paper is that the current ICAP mechanisms do not accurately ensure a desired level of reliability, as intended. The reason for this situation is because the current ICAP mechanisms consider the expected value of available generation, which is only the first order simplification of probabilistic generator capacity modeling, while ignoring the second and higher orders. We use simple examples to illustrate this claim and its implications. The incentives created through ICAP mechanisms directly impact the investment decisions of new generation and transmission. Therefore, the findings presented in the paper are critical as we move forward with the restructuring process. To achieve the desired level of reliability through market process, this paper may lead to understanding better the necessary modifications to the current ICAP mechanisms.
KW - Electric Power Industry Restructure
KW - Loss of Load Probability (LOLP)
KW - Market Mechanisms
KW - Power System Reliability
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M3 - Conference contribution
VL - 2
SP - 830
EP - 835
BT - Proceedings of the IEEE Power Engineering Society Transmission and Distribution Conference
ER -