Operational Revenue Insufficiency in Highly Renewable DC and AC-based LMP Markets

In this paper, we analyze the operational revenue insufficiency of generators for future high renewable energy scenarios. The “missing money” problem originates from flaws in energy price formulation in competitive wholesale electricity markets and is directly tied to revenue sufficiency. In addition to fundamental market inefficiencies, the problem is amplified by low and near-zero marginal cost generation and its variability. Low marginal cost generation has depressive impacts on electricity prices in energy markets, which can widen the gap. Here, we analyze the operational revenue of three future renewable scenarios under a DC optimal power flow (OPF) (without losses) and AC optimal power flow (OPF) (with losses) locational marginal price (LMP)-based market without line flow constraints. Simulations are shown for a modified IEEE-30 bus test network with high renewable penetration. Results indicate a decrease in profit for fossil-fuel generators as renewable penetration increases and a slight overall increase in the variance of profits under AC versus DC OPF.