| NSF Org: |
ECCS Division of Electrical, Communications and Cyber Systems |
| Recipient: |
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| Initial Amendment Date: | July 31, 2017 |
| Latest Amendment Date: | April 25, 2022 |
| Award Number: | 1711944 |
| Award Instrument: | Standard Grant |
| Program Manager: |
Aranya Chakrabortty
ECCS Division of Electrical, Communications and Cyber Systems ENG Directorate for Engineering |
| Start Date: | September 1, 2017 |
| End Date: | April 30, 2023 (Estimated) |
| Total Intended Award Amount: | $267,296.00 |
| Total Awarded Amount to Date: | $338,296.00 |
| Funds Obligated to Date: |
FY 2019 = $16,000.00 FY 2022 = $55,000.00 |
| History of Investigator: |
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| Recipient Sponsored Research Office: |
200 UNIVERSTY OFC BUILDING RIVERSIDE CA US 92521-0001 (951)827-5535 |
| Sponsor Congressional District: |
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| Primary Place of Performance: |
900 University Avenue Riverside CA US 92521-0001 |
| Primary Place of
Performance Congressional District: |
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| Unique Entity Identifier (UEI): |
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| Parent UEI: |
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| NSF Program(s): |
GOALI-Grnt Opp Acad Lia wIndus, EPCN-Energy-Power-Ctrl-Netwrks |
| Primary Program Source: |
01001718DB NSF RESEARCH & RELATED ACTIVIT 01001920DB NSF RESEARCH & RELATED ACTIVIT |
| Program Reference Code(s): |
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| Program Element Code(s): |
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| Award Agency Code: | 4900 |
| Fund Agency Code: | 4900 |
| Assistance Listing Number(s): | 47.041 |
ABSTRACT
The objective of this project is to build an analytical foundation and new mathematical tools to investigate and explain the complex and sometimes counter-intuitive results of placing convergence bids (CBs), a.k.a., virtual bids (VBs), in wholesale electricity markets. Several Independent System Operators (ISOs) in the United States have adopted CBs with the general assumption that CBs would enhance market efficiency by lowering the gap between the prices in the day-ahead market (DAM) and prices in the real-time market (RTM). However, analysis of ISO market data over the past few years has led to a current state of uncertainty and debate about the true advantages or disadvantages of CBs in electricity markets and their impact on utility customers and generation firms. What is alarming is the reason behind having such debates: there is currently no clear scientific understanding of how CBs work (or don't work) in wholesale electricity markets. However, the PI's preliminary studies have shown that some of the concerns that are recently raised by ISOs about CBs are fundamental and have root causes that can be understood through mathematical analysis and illustrative examples. In brief, many of these issues are due to the physics of transmission lines, generators, and loads, which do not allow application of the generally accepted principles of market efficiency as observed in trading in other financial and commodity marketplaces.
The intellectual merit in this proposal is to provide scientific fundamentals, in the form of mathematical analysis and illustrative examples and case studies, which can help to ultimately resolve the current state of uncertainty and debate on the subject of CBs in ISO markets. The intellectual advances in this project will be shaped and organized around three main research thrust themes: 1) characterizing the impact of CBs on price convergence; 2) characterizing the impact of CBs on overall market performance; and 3) explaining the current and future implications of the results and making recommendations to enhance the potential benefits of CBs while avoiding their potential detrimental impact in existing and emerging electricity markets.
PUBLICATIONS PRODUCED AS A RESULT OF THIS RESEARCH
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PROJECT OUTCOMES REPORT
Disclaimer
This Project Outcomes Report for the General Public is displayed verbatim as submitted by the Principal Investigator (PI) for this award. Any opinions, findings, and conclusions or recommendations expressed in this Report are those of the PI and do not necessarily reflect the views of the National Science Foundation; NSF has not approved or endorsed its content.
Convergence bidding, also known as virtual bidding, has been widely adopted in wholesale electricity markets in the United States in recent years. It provides opportunities for market participants to arbitrage on the difference between the day-ahead market locational marginal prices and the real-time market locational marginal prices. However, the characteristics and the impact of convergence bids on wholesale electricity markets can be complex and sometimes counter-intuitive. To address some of the open problems in this field, this project developed an analytical foundation and new mathematical tools to investigate and explain the impact and some of the implications of convergence bids in wholesale electricity markets. Some of the key technical aspects that were studied in this project included: obtaining the conditions under which convergence bids cause undesirable divergence between the prices in the real-time market and the prices in day-ahead market, which can reduce market efficiency; reverse engineering the convergence bidding strategies in real-world wholesale electricity markets; developing new convergence bidding strategies in wholesale electricity markets to enhance bidding performance; and developing methods to assess the desirable and undesirable impacts of convergence bids during blackouts, such as during a heat wave in California. The results from this project can help enhance the performance of wholesale electricity markets, which can lead to savings to the rate payers. This project resulted in several scholarly publications in reputable journals and conference in this field. The project also trained both graduate and undergraduate students to gain knowledge in power systems, electricity markets, and data analytics in power systems.
Last Modified: 06/29/2023
Modified by: Amir-Hamed Mohsenian-Rad
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