Coordinated RES and ESS Planning Framework Considering Financial Incentives Within Centralized Electricity Market

Coordinated investment and operations within renewable portfolio standards is one of the key technologies to meet the renewable energy target and realize the economic operations of the power system. This paper proposes a unified framework of coordinated planning and financial incentives. Joint investment in renewable energy and energy storage and joint optimization of energy and ancillary services are integrated into a unified framework. Various factors are taken into consideration by the social planner in the centralized electricity market, such as the sitting and sizing of renewable energy and energy storage, charge and discharge efficiency of the energy storage, transmission network constraints, reserve capacity, and financial incentives. This framework provides a tool for the social planner to determine the optimal planning scheme of renewable energy and energy storage. The conclusion derived is that the sum of market revenue and financial subsidies of renewable energy and energy storage is exactly equal to their investment cost which is obtained by the Karush-Kuhn-Tucker (KKT) condition of maximizing social welfare problems. A numerical result based on the modified IEEE-39 bus test system demonstrates the effectiveness of the unified framework. The impact of financial incentives, reserve capacity, and production costs on capital investment are studied.