Reserve costs allocation model for energy and reserve market simulation

This paper proposes a new model to allocate reserve costs among the involved players, considering the characteristics of the several entities, and the particular circumstances at each moment. The proposed model is integrated in the Multi-Agent Simulator of Competitive Electricity Markets (MASCEM), which enables complementing the multi-agent simulation of diverse electricity market models, by including the joint simulation of energy and reserve markets. In this context, the proposed model allows allocating the payment of reserve costs that result from the reserve market. A simulation based on real data from the Iberian electricity market - MIBEL, is presented. Simulation results show the advantages of the proposed model in sharing the reserve costs fairly and accordingly to the different circumstances. This work thus contributes the study of novel market models towards the evolution of power and energy systems by adapting current models to the new paradigm of high penetration of renewable energy generation.This work has received funding from the European Union's Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement No 641794 (project DREAM-GO) and a grant agreement No 703689 (project ADAPT); and from FEDER Funds through COMPETE program and from National Funds through FCT under the project UID/EEA/00760/2013info:eu-repo/semantics/publishedVersio