Market Mechanism Design of Inertia and Primary Frequency Response with Consideration of Energy Market

The shortage of inertia and primary frequency response (IPFR) will be more severe in future power systems since conventional fossil-based synchronous generators are gradually being replaced by variable renewable energy (VRE) generators. To relieve the shortage of IPFR, corresponding market mechanisms should be designed and incorporated to motivate appropriate provision from various sources. The mechanism of IPFR provision from different types of generators and its tight relation with energy production should receive particular attention. This paper proposes a novel IPFR market mechanism in which the energy market is taken into joint consideration. The virtual inertia and droop factor provided by VRE generators are defined and introduced, considering its dominant share in future power systems. A differentiated pricing scheme is designed towards incentive compatibility, considering provision from different types of generators with different quality levels and opportunity costs. Then, the proposed IPFR market mechanism is formulated, and a modified piecewise linearization method is utilized to simplify the non-linear nadir constraints. Finally, the model is tested on a modified IEEE 30-bus system according to historical data in CAISO. The results indicate the proposed mechanism could increase the utilization of VREs, decrease system operation costs, and guarantee reasonable payback for various types of generators.