The effect of variability-mitigating market rules on the operation of wind power plants

In power systems with many wind generators, market rules have been slowly changing in order to mitigate or internalize the system costs relating to wind variability. We examine several potential market policies for mitigating the effects of wind variability. For each market policy, we determine the effect that the policy would have on the operation and profitability of wind plants, using time series analysis to estimate the actions of profit-maximizing wind generators acting as price takers. We identify policy scenarios that significantly reduce short-term (30-min) wind fluctuations while having little effect on wind plant revenue. For example, in a scenario where the ramp-rate of wind is limited and ramping violations are assigned a small monetary penalty, a loose ramp rate limit (40 % per 15-min period) can reduce 30-min fluctuations by 35 % while reducing wind plant revenue by only 0.2 %. The novel market-based strategies investigated in this work may enable reductions in the overall system cost of wind integration and can be designed so that both wind generators and system operators are better off than under the status quo.