Energy markets and responsive grids modeling, control, and optimization

The IMA Volumes in Mathematics and its Applications Sean Meyn Tariq Samad · Ian Hiskens Jakob Stoustrup  Editors Energy Markets and Responsive Grids Modeling, Control, and Optimization The IMA Volumes in Mathematics and its Applications Volume 162 Series editor Daniel Spirn, University of Minnesota, MN, USA Institute for Mathematics and its Applications (IMA) The Institute for Mathematics and its Applications (IMA) was established in 1982 as a result of a National Science Foundation competition The mission of the IMA is to connect scientists, engineers, and mathematicians in order to address scientific and technological challenges in a collaborative, engaging environment, developing transformative, new mathematics and exploring its applications, while training the next generation of researchers and educators To this end the IMA organizes a wide variety of programs, ranging from short intense workshops in areas of exceptional interest and opportunity to extensive thematic programs lasting nine months The IMA Volumes are used to disseminate results of these programs to the broader scientific community The full list of IMA books can be found at the Web site of the Institute for Mathematics and its Applications: http://www.ima.umn.edu/springer/volumes.html Presentation materials from the IMA talks are available at http://www.ima.umn.edu/talks/ Video library is at http://www.ima.umn.edu/videos/ Daniel Spirn, Director of the IMA More information about this series at http://www.springer.com/series/811 Sean Meyn • Tariq Samad • Ian Hiskens Jakob Stoustrup Editors Energy Markets and Responsive Grids Modeling, Control, and Optimization 123 Editors Sean Meyn Department of Electrical and Computer Engineering University of Florida Gainesville, FL, USA Ian Hiskens Department of Electrical Engineering and Computer Science University of Michigan Ann Arbor, MI, USA Tariq Samad Technological Leadership Institute University of Minnesota Minneapolis, MN, USA Jakob Stoustrup Department of Electronic Systems Aalborg University Aalborg, Denmark ISSN 0940-6573 ISSN 2198-3224 (electronic) The IMA Volumes in Mathematics and its Applications ISBN 978-1-4939-7821-2 ISBN 978-1-4939-7822-9 (eBook) https://doi.org/10.1007/978-1-4939-7822-9 Library of Congress Control Number: 2018942505 Mathematics Subject Classification: 46N10 © Springer Science+Business Media, LLC, part of Springer Nature 2018 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations Printed on acid-free paper This Springer imprint is published by the registered company Springer Science+Business Media, LLC part of Springer Nature The registered company address is: 233 Spring Street, New York, NY 10013, U.S.A Foreword This volume contains a selection of essays based on a workshop “Control at Large Scales: Energy Markets and Responsive Grids” held at the Institute for Mathematics and its Applications from May 9–13, 2016 and organized by Sonja Glavaski, Ian Hiskens, Sean Meyn, Tariq Samad, and Jakob Stoustrup These papers provide a landscape of the mathematical, financial and policy challenges that are present with the design of an efficient, stable and resilient electrical grid The workshop ran as part of an annual thematic year organized by Fariba Fahroo, Tryphon Georgiou, J.W Helton, Anders Rantzer, Tariq Samad, Eduardo Sontag and Allen Tannenbaum on Control Theory and its Applications that ran at the IMA during the 2015–2016 academic year We would like to especially thank volume editors Ian Hisken, Sean Meyn, Tariq Samad and Jakob Stroustrup Finally, we acknowledge the National Science Foundation for its support of the IMA Minneapolis, MN, USA Daniel Spirn v Introduction The electric power infrastructure in any large region amounts to a system of systems—dynamically interconnected domains with communication, computation, and control functions at multiple temporal and spatial scales The control loops that regulate electricity exist alongside electricity markets that introduce their own dynamics as they encourage generators to come on-line, or take a break from operations The grid today is remarkably reliable, given its inherent complexity and uncertainty However, a tremendous transformation of the power grid is under way across the globe The movement towards a so-called smart grid has been driven by many different players in industry and by societal pressure—people are concerned about the future of the planet, and in particular the impact of global warming A truly smart transformation of the grid will bring about many societal benefits, including a reduction in pollution and greenhouse gases, reduced capital and operational expenses, and improved energy security To ensure that our electricity supply remains reliable requires careful consideration of control strategies, communications, and market design In the future, as is true today, the ultimate challenge is to control generation, transmission, distribution, storage, and consumption of electricity Consumers, markets, and regulators are also participants and stakeholders, and the multiple roles and interrelationships may exacerbate the challenge in the absence of appropriate market rules and control designs Quoting one of the closing statements of the first chapter: In order to sustain such a drastic and rapid change, new control paradigms have to be developed moving the grid to a flexible, cooperative structure providing survivability of the system This cannot be achieved without revisiting traditional reliability criteria and adding such new concepts as resilience, robustness and flexibility The editors of this volume organized the IMA workshop on Control at Large Scales: Energy Markets and Responsive Grids in May, 2016, as part of the yearlong IMA program on Control Theory and its Applications, held at the University of Minnesota The goal of the workshop was to bring together experts and newcomers interested in all aspects of the challenges facing the creation of a more sustainable vii viii Introduction electricity infrastructure Included in the meeting were experts in distributed control, stochastic control, stability theory, economics, policy, and financial mathematics, as well as in all aspects of power system operation This monograph consists of selected essays by participants in the workshop on the challenges we face today and in the future, along with potential solutions All contributions were subjected to a peer-review process, with significant revisions in many cases The chapters are loosely organized according to theme, beginning with a survey from three authors from ISO New England The next few chapters consider several significant challenges in the domain of market design A theme in these chapters is the question of incentives for innovation in markets with significant risk on many time scales, and where assets may cost billions of dollars These chapters are followed by chapters on optimization and distributed control, and the book concludes with articles addressing resilience and vulnerability Large-scale renewable generation, distributed energy resources, integration of supply-side and demand-side management, and dynamic markets herald a revolutionary change in power systems The associated challenges are daunting and will require multidisciplinary approaches With the breadth and depth of expertise it encapsulates, we are hopeful that this volume will contribute towards the envisioned future for serving humanity’s energy needs We are grateful to our authors for their patience with the review process and other, less excusable, delays The workshop itself was a hive of discussion and debate and all participants deserve our thanks as well As with all IMA workshops, the arrangements were excellent and allowed the organizers to dedicate their attention to the workshop technical program We would like to thank Fadil Santosa, the IMA Director, in particular for his support and encouragement Finally, it has been a pleasure to work with the Springer team: Achi Dosanjh, Nick Valente, and Danielle Walker Gainesville, FL, USA Minneapolis, MN, USA Ann Arbor, MI, USA Aalborg, Denmark Sean Meyn Tariq Samad Ian Hiskens Jakob Stoustrup Contents How to Manage the Complexity of the Grid? Eugene Litvinov, Feng Zhao, and Tongxin Zheng Naïve Electricity Markets David B Spence 29 Capacity Markets: Rationale, Designs, and Trade-Offs Alfredo Garcia 59 Redesign of US Electricity Capacity Markets Robert W Moye and Sean P Meyn 73 A Swing-Contract Market Design for Flexible Service Provision in Electric Power Systems 105 Wanning Li and Leigh Tesfatsion A Dynamic Framework for Electricity Markets 129 Anuradha Annaswamy and Stefanos Baros Fast Market Clearing Algorithms 155 Arvind U Raghunathan, Frank E Curtis, Yusuke Takaguchi, and Hiroyuki Hashimoto Small Resource Integration Challenges for Large-Scale SCUC 177 Cuong Nguyen, Lei Wu, Muhammad Marwali, and Rana Mukerji Multi-Grid Schemes for Multi-Scale Coordination of Energy Systems 195 Sungho Shin and Victor M Zavala Graphical Models and Belief Propagation Hierarchy for Physics-Constrained Network Flows 223 Michael Chertkov, Sidhant Misra, Marc Vuffray, Dvijotham Krishnamurthy, and Pascal Van Hentenryck Profit Maximizing Storage Integration in AC Power Networks 251 Anya Castillo and Dennice F Gayme ix x Contents Virtual Inertia Placement in Electric Power Grids 281 Bala Kameshwar Poolla, Dominic Gr, Theodor Borsche, Saverio Bolognani, and Florian Dưrfler A Hierarchy of Models for Inverter-Based Microgrids 307 Olaoluwapo Ajala, Alejandro D Domínguez-García, and Peter W Sauer Asynchronous Coordination of Distributed Energy Resources with Packetized Energy Management 333 Mads Almassalkhi, Luis Duffaut Espinosa, Paul D H Hines, Jeff Frolik, Sumit Paudyal, and Mahraz Amini Ensemble Control of Cycling Energy Loads: Markov Decision Approach 363 Michael Chertkov, Vladimir Y Chernyak, and Deepjyoti Deka Distributed Control Design for Balancing the Grid Using Flexible Loads 383 Yue Chen, Md Umar Hashmi, Joel Mathias, Ana Buši´c, and Sean Meyn Disaggregating Load by Type from Distribution System Measurements in Real Time 413 Gregory S Ledva, Zhe Du, Laura Balzano, and Johanna L Mathieu Risk-Aware Demand Management of Aggregators Participating in Energy Programs with Utilities 439 William D Heavlin, Ana Radovanovi´c, Varun Gupta, and Seungil You Toward Resilience-Aware Resource Allocation and Dispatch in Electricity Distribution Networks 461 Devendra Shelar, Saurabh Amin, and Ian Hiskens A Cautionary Tale: On the Effectiveness of Inertia-Emulating Load as a Cyber-Physical Attack Path 491 Hilary E Brown and Christopher L DeMarco ... Ian Hiskens Jakob Stoustrup Editors Energy Markets and Responsive Grids Modeling, Control, and Optimization 123 Editors Sean Meyn Department of Electrical and Computer Engineering University... Scales: Energy Markets and Responsive Grids held at the Institute for Mathematics and its Applications from May 9–13, 2016 and organized by Sonja Glavaski, Ian Hiskens, Sean Meyn, Tariq Samad, and. .. clearing and settling the day-ahead energy, real-time energy, ancillary service markets, financial transmission rights (FTR), and forward capacity markets, monitoring and mitigating market power, and