Today’s electricity markets were built for dispatchable fossil and nuclear generation. They absorb small amounts of renewables easily — but when variable, uncertain wind and solar supply a large share of demand, the market structure itself has to change to keep the grid reliable.

We design market mechanisms that price the stochastic nature of renewable generation and mitigate the imbalance costs of deep integration. Using stochastic programming and auction theory, a generator can hedge shortfall and still earn a positive payoff: the optimal contracted quantity turns out to be a function of the inverse CDF of the renewable supply, and pairing that allocation with a Myerson payment rule elicits truthful bidding from buyers.

Highlights

• Auctioning electricity under deep renewable integration using a penalty for shortfall.
• Preemptive and reliability-aware scheduling of EV charging as flexible demand.
• Mechanisms that let load-serving entities bid profitably while managing risk.

More on the Research page and in the Publications.