Planning for electricity supply considering market clearing price

Recently, the Japanese Electric Power Exchange (JEPX) was established so that load service entities (LSEs) can sell and purchase electricity. This is expected to create an effective system for balancing the supply and demand of electricity. LSEs generate and purchase electricity, and their production cost of electricity is related directly to their profits. Furusawa et al.[2005] proposed a model and used simulations to evaluate the economic merits of energy storage systems (ESs) when consumers install an ES and LSEs supply all electric demand from the market. In addition, they examined incentives to install an ES. In this paper, we mainly expand Furusawa's model and examine transactions where consumers install an ES and a private power generator. The reasons are because there are many cases where consumers are covering part of the demand by privately generating electric power in recent years. To reflect the Japan's present condition, we assume that LSEs supply power from power plants and the market, and then we formulate a profit maximization model and simulate it. The optimal operating plans for consumers and LSEs are examined, and the conditions that are desirable for both of consumers and LSEs are investigated. In addition, we study influences to market clearing price by installing two systems.