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Abstract

The capacity market provides economic guidance for generation investment and ensures the adequacy of generation capability for power systems. With the rapidly increasing proportion of renewable energy, the adequacy of flexibility and resilience becomes more crucial for the secure operation of power systems. In this context, this paper incorporates the flexibility and resilience demand into the capacity market by formulating the capacity demand curves for ramping capability, inertia and recovery capabilities besides the generation capability. The guidance on generation investment of the capacity market is also taken into account by solving the generation investment equilibrium among generation companies with a Nash Cournot model employing an equivalent quadratic programming formulation. The overall problem is established as a trilevel game and an iterative algorithm is devised to formulate the capacity demand curves in the upper level based on Genco's investment acquired from the middle and lower levels. The case study further demonstrates that to incorporate flexibility and resilience demand into the capacity market could stimulate proper generation investment and ensure the adequacy of flexibility and resilience in power systems.