2 research outputs found
Gibbs Sampling for Game-Theoretic Modeling of Private Network Upgrades with Distributed Generation
Renewable energy is increasingly being curtailed, due to oversupply or
network constraints. Curtailment can be partially avoided by smart grid
management, but the long term solution is network reinforcement. Network
upgrades, however, can be costly, so recent interest has focused on
incentivising private investors to participate in network investments. In this
paper, we study settings where a private renewable investor constructs a power
line, but also provides access to other generators that pay a transmission fee.
The decisions on optimal (and interdependent) renewable capacities built by
investors, affect the resulting curtailment and profitability of projects, and
can be formulated as a Stackelberg game. Optimal capacities rely jointly on
stochastic variables, such as the renewable resource at project location. In
this paper, we show how Markov chain Monte Carlo (MCMC) and Gibbs sampling
techniques, can be used to generate observations from historic resource data
and simulate multiple future scenarios. Finally, we validate and apply our
game-theoretic formulation of the investment decision, to a real network
upgrade problem in the UK.Comment: Preprint of final submitted version. arXiv admin note: text overlap
with arXiv:1908.1031
Strategic decision-making on low-carbon technology and network capacity investments using game theory
In recent years, renewable energy technologies have been increasingly adopted and seen as
key to humanity’s efforts to reduce greenhouse gases emissions and combat climate change.
Yet, a side effect is that renewables have reached high penetration rates in many areas,
leading to undesired curtailment, especially if existing grid infrastructure is insufficient and
renewable energy generated cannot be exported at areas of high energy demand. The issue
of curtailment is compelling at remote areas, where renewable resources are abundant,
such as in windy islands. Not only renewable production is wasted, but often curtailment
comes with high costs for renewable energy developers and energy end-users. In fact,
procedures on how generators access the grid and how curtailment is applied, are key
factors that affect the decisions of investors about generation and grid capacity installed.
Part of this thesis studies the properties of widely used curtailment rules, applied in
several countries including the UK, and their effect on strategic interactions between self-interested and profit-maximising low-carbon technology investors. The work develops a
game-theoretic framework to study the effects of curtailment on the profitability of existing
renewable projects and future developments. More specifically, work presented in this
thesis determines the upper bounds of tolerable curtailment at a given location that allows
for profitable investments. Moreover, the work studies the effect of various curtailment
strategies on the capacity factor of renewable generators and the effects of renewable
resource spatial correlation on the resulting curtailment. In fact, power network operators
face a significant knowledge gap about how to implement curtailment rules that achieve
desired operational objectives, but at the same time minimise disruption and economic
losses for renewable generators. In this context, this thesis shows that fairness and equal
sharing of imposed curtailment among generators is important to achieve maximisation of
the renewable generation capacity installed at a certain area. A new rule is proposed that
minimises disruption and the number of curtailment events a generator needs to respond
to, while achieving fair allocation of curtailment between generators of unequal ratings.
While curtailment can be reduced by smart grid techniques, a long term solution is
increasing the network capacity. Grid reinforcements, however, are expensive and costs
weight to all energy consumers. For this reason, debate in the energy community has
focused on ways to attract private investment in grid reinforcement. A key knowledge
gap faced by regulators is how to incentivise such projects, that could prove beneficial,
especially in cases where several distributed generators can use the same power line to
access the main grid, against the payment of a transmission fee. This thesis develops
methods from empirical and algorithmic game theory to provide solutions to this problem. Specifically, a two-location model is considered, where excess renewable generation
and demand are not co-located, and where a private renewable investor constructs a power
line, providing also access to other generators, against a charge for transmission. In other
words, the privately developed line is shared among all generators, a principle known
as ‘common access’ line rules. This formulation may be studied as a Stackelberg game
between transmission and local generation capacity investors. Decisions on optimal (and
interdependent) renewable capacities built by investors, affect the resulting curtailment
and profitability of projects and can be determined in the equilibrium of the game.
A first approach to study the behaviour of investors at the game equilibrium, assumed a
simple model, based on average values of renewable production and demand over a larger
time horizon. This assumption allowed for an initial examination of the Stackelberg game
equilibrium, by achieving an analytical, closed-form solution of the equilibrium and the
investigation of its properties for a wide range of cost parameters.
Next, a refined model is developed, able to capture the stochastic nature of renewable
production and variability of energy demand. A theoretical analysis of the game is
presented along with an estimation of the equilibrium by utilisation of empirical game-theoretic techniques and production/demand data from a real network upgrade project in
the UK. The proposed method is general, and can be applied to similar case studies, where
there is excess of renewable generation capacity, and where sufficient data is available.
In practice, however, available data may be erroneous or experience significant gaps.
To deal with data issues, a method for generating time series data is developed, based on
Gibbs sampling. This attains an iterative simulation analysis with different time series data
as an input (Markov Chain Monte Carlo), thus achieving the exploration of the solution
space for multiple future scenarios and leading to a reduction of the uncertainty with
regards to the investment decisions taken.
Energy storage can reduce curtailment or defer network upgrades. Hence, the last part
of this thesis proposes a model consisted of a line investor, local generators and a third
independent storage player, who can absorb renewable production, that would otherwise
have been curtailed. The model estimates optimal transmission, generation and storage capacities for various financial parameters. The value of storage is determined by comparing
the energy system operation with and without energy storage. All models proposed in this
thesis, are validated and applied to a practical setting of a grid reinforcement project, in
the UK, and a large dataset of real wind speed measurements and demand.
In summary, the research work studies the interplay among self-interested and indepen dent low-carbon investors, at areas of excess renewable capacity with network constraints
and high curtailment. The work proposes a mechanism for setting transmission charges
that ensures that the transmission line gets built, but investors from the local community,
can also benefit from investing in renewable energy and energy storage. Overall, the
results of this work show how game-theoretic techniques can help energy system stakeholders to bridge the knowledge gap about setting optimal curtailment rules and determining
appropriate transmission charges for privately developed network infrastructure.Engineering and Physical Sciences Research Council (EPSRC