National Renewable Energy Laboratory (NREL)

The National Renewable Energy Laboratory (NREL)-led project team will develop an operating paradigm that leverages flexibility from distributed and bulk resources to cost-effectively manage delivery risk of intermittent resources, like solar and wind. Flexibility from a limited number of Distributed Energy Resources (DERs) is offered in wholesale energy markets today, and the value of flexibility is not yet recognized for economic hedging of delivery risk. The project team will develop transparent and verifiable risk scores for DERs that combine insights from advanced artificial intelligence methods and domain expertise. The DER risk scores will quantify asset delivery risk and inform bidding and scheduling strategies of aggregators and utilities. NREL will design an incentive compatible flexibilty auction and novel insurance products that hedge delivery risk to recognize and leverage resource performance in a cost-effective, reliable manner. The team’s experts in actuarial sciences, electricity markets, and technology companies will build upon knowledge in risk management from the finance sector to propose rigorous solutions for the electric sector.

PERFORM projects will design methods and risk scores to clearly communicate the physical delivery risk of an energy asset’s offer and design grid management systems that organically capture uncertainty. These management systems will evaluate and hedge the system risk position to meet or exceed a baseline system risk index. This pursuit will achieve the following area impacts: