A new approach for reserve market clearing and cost allocating in a pool model

A new approach for optimal reserve determination and cost allocation in the pool-based and disaggregated market model using a well-being framework is presented in this paper. In the proposed method, customers have the chance to specify the risk level which they are willing to accept. Firstly, the energy market is cleared, and afterwards the reserve market is cleared such that the required risk levels of different customers are satisfied. Then, according to the required risk levels and the provided reserve, the cost of reserve is allocated between the different customers with different reliability requirements. For fairly managing the shortage between different customers in the real time operation by the system operator, the Interruption Factoris introduced for the first time in this paper. Although from the economic point of view reliability is a public good, using the concept of the interruption factor, different customers with different reliability requirements can be differentiated. Finally, the proposed method is applied to the IEEE-RTS to examine the applicability and effectiveness of the proposed method.