Electric Power Systems Research 152 (2017) 223–236 Contents lists available at ScienceDirect Electric Power Systems Research j o ur na l ho mepage: www.elsevier.com/locate/epsr A novel stochastic reserve cost allocation approach of electricity market agents in the restructured power systems Amin Shokri Gazafroudi a,b,∗ , Miadreza Shafie-khah c , Mehrdad Abedi b , S. Hossein Hosseinian b , Gholam Hossein Riahy Dehkordi b , Lalit Goel d , Peyman Karimyan b , Francisco Prieto-Castrillo a,e , Juan Manuel Corchado a,f , João P.S. Catalão c,g,h a Department of Computer Science and Automation, School of Science University of Salamanca, Plaza de la Merced s/n, 37008 Salamanca, Spain b Electrical Engineering Department, Amirkabir University of Technology (Tehran Polytechnic), No. 424, Hafez Avenue, 15914 Tehran, Iran c C-MAST, University of Beira Interior, Covilhã 6201-001, Portugal d School of Electrical and Electronic Engineering, Nanyang Technological University, 639798 Singapore, Singapore e MediaLab, Massachusetts Institute of Technology, Cambridge, Massachusetts, USA f Osaka Institute of Technology, Asahi-ku Ohmiya, Osaka 535-8585, Japan g INESC TEC and the Faculty of Engineering of the University of Porto, Porto 4200-465, Portugal h INESC-ID, Instituto Superior Técnico, University of Lisbon, Lisbon 1049-001, Portugal a r t i c l e i n f o Article history: Received 9 October 2016 Received in revised form 6 June 2017 Accepted 10 July 2017 Available online 22 July 2017 Keywords: Customer choice of reliability Simultaneous market clearing Stochastic programming Reserve cost allocation Wind power integrating a b s t r a c t In this paper, a new mechanism is proposed to apportion expected reserve costs between electricity market agents in the power system. The uncertainties of generation units, transmission lines, wind power generation and electrical loads are considered in this model. Hence, a Stochastic Unit Commitment (SUC) is used to apply the uncertainty of stochastic variables in the simultaneous energy and reserve market- clearing problem. Moreover, electrical customers can participate in the electricity market based on their desired strategies. In this paper, a novel method is proposed to allocate reserve costs between GenCos, TransCos, electrical customers and wind farm owners. Consequently, market agents are responsible for paying a portion of the allocated expected reserve costs based on the economic metrics that are defined for the first time in this paper. Finally, two cases including a 3-bus test system and IEEE-RTS are utilized to illustrate the performance of the proposed mechanism to share the expected reserve costs. © 2017 Elsevier B.V. All rights reserved. 1. Introduction 1.1. Aims and motivation Restructuring in the power systems provides more freedom for different agents to participate in the Electricity Markets (EMs). Elec- trical consumers are one type of the market agents that can behave strategically based on their aims in the EM [1,2]. Although some of the consumers compete in the EM to maximize their economic prof- ∗ Corresponding author at: Department of Computer Science and Automation, School of Science University of Salamanca, Plaza de la Merced s/n, 37008 Salamanca, Spain. E-mail addresses: shokri@usal.es, shokri amin@ymail.com (A.S. Gazafroudi), miadreza@ubi.pt (M. Shafie-khah), abedi@aut.ac.ir (M. Abedi), hosseinian@aut.ac.ir (S.H. Hosseinian), gholam@aut.ac.ir (G.H.R. Dehkordi), elkgoel@ntu.edu.sg (L. Goel), peyman.sena@gmail.com (P. Karimyan), franciscop@usal.es (F. Prieto-Castrillo), corchado@usal.es (J.M. Corchado), catalao@ubi.pt (J.P.S. Catalão). its [2], providing their required electricity demands with high level of reliability is the main concern of other electrical consumers [3]. In other words, the electrical consumer prefers to disregard or reduce its required electrical demand to achieve more economic profit, if it competes in the EM based on the economic view. However, there is a group of consumers that are willing to lose economically while their desired electrical load is provided. In the restructured power systems, in addition to the energy, other services are defined to supply the different system require- ments, these are called Ancillary Services (ASs) [3]. Operating Reserves (ORs) are one kind of ASs that play an important role in providing standard reliability level of the power system espe- cially when the Independent System Operator (ISO) is faced with contingency events or probability electricity production due to the renewable energies such as wind energy. Besides, the strategic behavior of the electrical customers can affect positively or neg- atively on ISO’s decisions. If these effects are negative, they can increase the system operating costs. Moreover, uncertainty in gen- http://dx.doi.org/10.1016/j.epsr.2017.07.012 0378-7796/© 2017 Elsevier B.V. All rights reserved.