Favorable price trends and increasing demand for renewable energy sources portend accelerating integration of solar photovoltaic (PV) generation into traditional electric power system networks. Managing the variable output of massive PV resources makes system frequency regulation more complex and expensive. ISOs must procure additional regulation and load following capacity, while power plants must supply more regulation work. In contrast to costly physical storage solutions, this thesis proposes to address the issue by reconfiguring the electricity market pricing structure to translate all power imbalances into real-time market price signals. More accurately determining the instantaneous value of energy, electric power markets could reward participants who can quickly respond to frequency fluctuations. By utilizing short term forward markets to monetize the risk associated with intermittency, the true cost of reliability is determined and could reduce wasteful capacity payments. This market redesign is an ideal open platform for disparate smart grid technologies which could encourage all suppliers, loads and generator, to offer supply or reduce consumption when it is needed most and could vastly improve frequency performance metrics.MSCommittee Chair: Grijalva, Santiago; Committee Member: Begovic, Miroslav; Committee Member: Rohatgi, Ajee
