Tuesday, September 10, 2013 at 4:15pm
Frank H. T. Rhodes Hall, 253
ORIE Colloquium: Eilyan Bitar (Cornell University) - Selling Random Energy
Pressing environmental problems, energy supply security issues, and nuclear power safety concerns drive the worldwide interest in renewable energy. However, unlike conventional generation, power from wind and solar resources is inherently variable. It is non-dispatchable, highly intermittent, and difficult to forecast on horizons exceeding 15 minutes. This intrinsic variability in generation represents the most important obstacle to its large-scale grid integration. The current approach is to absorb this variability with dispatchable reserve generation. This works at today's modest penetration levels. But it will not scale. At deep penetration levels, the levels of necessary reserves become economically untenable, and defeat the net carbon benefit.
So how can we economically enable deep penetration of renewable generation? In the first half of the talk, we will discuss a portfolio of mechanisms to support integration within existing market constructs. In particular, we will formally explore the extent to which energy storage can be leveraged to firm forward contract offerings for energy supplied by intermittent resources. Specifically, we derive formulae that reveal the explicit dependency of the marginal value of storage capacity on certain spectral properties of the intermittent supply process. In part two of the talk, we will abandon conventional markets, in which electricity is treated as a firm undifferentiated commodity, and suggest a novel market for quality-differentiated electric power service. Namely, package random wind power into electricity with different levels of quality and sell them at different prices. Such a market for wind requires minimal reserve capacity, as the quantity risk of insufficient wind power is largely absorbed by those consumers who purchase lower cost, lesser quality electricity. However, we have to think of electricity differently. We close by suggesting several challenging problems in monetizing and incentivizing demand side participation.
Bio: Eilyan Bitar is currently an Assistant Professor in the School of Electrical and Computer Engineering at Cornell University. Prior to joining Cornell in the Fall 2012, he was engaged as a Postdoctoral Fellow in the department of Computing + Mathematical Science (CMS) at the California Institute of Technology and at the University of California, Berkeley in Electrical Engineering and Computer Science during the 2011-12 academic year. A native Californian, he received both his Ph.D. (2011) and B.S. (2006) from the University of California, Berkeley. His research interests include energy, stochastic control, and optimization.