A New Risk Assessment and Management Paradigm (NewRAMP) in Electricity Markets

Sponsor: U.S. Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E)

Award Number: DE-AR0001282

PI: Michael Caramanis

Co-Is/Co-PIs: Christos Cassandras, Ioannis (Yannis) Ch. Paschalidis, Pablo Ruiz, Panagiotis Andrianesis, Nalin Kulatilaka, John Liagouris, William Hogan, Dimitris Bertsimas

Abstract:

The grid relies on conventional bulk power plants to provide the flexibility to operate power systems reliably. These assets can guarantee available capacity except in rare events. The existing risk management strategy protects against those rare events and aligns well with conventional technologies. New risk management strategies are needed due to the shift in grid resources: intermittent renewable resources, distributed energy resources, and storage technologies. Management systems must be able to leverage all capabilities of these new technologies to maintain an economical and reliable grid. PERFORM (Performance-based Energy Resource Feedback, Optimization, and Risk Management) projects aim to address that need by developing methods to quantify and manage risk at the asset and system levels for the grid.

The proposed work offers a New Risk Assessment and Management Paradigm (NewRAMP). NewRAMP develops innovative approaches for quantifying the risk of individual assets based on their performance and ability to deliver on their assumed obligations. NewRAMP translates this risk to the system level to increase the efficiency of power system operation and planning in the presence of extensive market participation by “risky” assets. NewRAMP synthesizes ideas and theories from finance and insurance, operations research, power system engineering, and electricity market design into methodologies incorporating a risk-driven paradigm to achieve higher adoption of renewable resources and more efficient and reliable system operation. The proposed work will provide proof of concept that NewRAMP can manage system and individual asset risk in a manner far superior to current practice, as measured on metrics applied to the Southwest Power Pool (SPP) territory.

Boston University received this competitive award from ARPA-E’s Performance-based Energy Resource Feedback, Optimization, and Risk Management (PERFORM) program, which works to develop innovative management systems that represent the relative delivery risk of each asset, like wind farms or conventional power plants, and balance the collective risk of all assets across the grid.

For more information: click here or visit PI Caramanis’ website  and download “NewRamp”.