Large-scale integration of wind generation introduces planning and operational difficulties due to the intermittent and highly variable nature of wind. In particular, the generation from non-hydro renewable resources is inherently variable and often times difficult to predict. Integrating significant amounts of renewable generation, thus, presents a challenge to the power systems operators, requiring additional flexibility, which may incur a decrease of conventional generation capacity.

This research investigates the algorithms employing emerging computational advances in system operation policies that can improve the flexibility of the electricity industry. The focus of this study is on flexible operation policies for renewable generation, particularly wind generation. Specifically, distributional forecasts of windfarm generation are used to dispatch a “discounted” amount of the wind generation, leaving a reserve margin that can be used for reserve if needed. This study presents systematic mathematic formulations that allow the operator incorporate this flexibility into the operation optimization model to increase the benefits in the energy and reserve scheduling procedure. Incorporating this formulation into the dispatch optimization problem provides the operator with the ability of using forecasted probability distributions as well as the off-line generated policies to choose proper approaches for operating the system in real-time. Methods to generate such policies are discussed and a forecast-based approach for developing wind margin policies is presented. The impacts of incorporating such policies in the electricity market models are also investigated.