Risk-Aware Power System Control, Dispatch and Market Incentives

The power industry sees risk as statistically independent of today's operational practices and regulations. The challenge is convincing the industry to proactively and explicitly study, quantify, price, and incorporate risk into dispatch and response algorithms. Columbia University will develop a risk dashboard to address this challenge that will enable independent system operators (ISOs) of the electrical grid to compute and analyze engineering and financial risks occurring on operational time scales ranging from several minutes to days. This dashboard will facilitate efficient and accurate interpretations of complex scenario-based risk analyses (for both asset and system levels). The dashboard will rely on stress-testing statistical factor models and newly designed energy asset and systemic risk metrics to continuously track system and market conditions and proactively dispatch available resources to avoid insecure operations. This project will develop a risk-versus-cost tradeoff for grid operations and will leverage the flexibility of renewable, demand, and storage resources to reduce risk while compensating these assets accordingly. The team will leverage financial risk management instruments to hedge against losses under severe or complex energy scenarios to reconcile technical risks identified using developed risk metrics.