Designing a 100% renewable-penetrated electricity market with battery energy storages assisted by reliable simulations

The urgent need to address global warming has led to a focus on decarbonizing the power sector, particularly by shifting to 100% renewable energy sources. However, the variability and unpredictability of renewable energy create significant challenges for the stability and efficiency of power systems. Addressing these issues requires not just technological solutions like Battery Energy Storage Systems (BESS) but also strategic approaches in electricity market operations. Crucially, the success of electricity markets, especially those fully penetrated by renewable energy, hinges on effective market design. Market design must optimize resource allocation, align incentives of market participants with system operator goals, and prevent market manipulation to maximize social welfare and ensure market integrity. However, existing market designs have limitations including insufficient methods for simulation and validation. This paper proposes a comprehensive market design for a 100% renewable-penetrated electricity market with BESS integration, focusing on coordinated operation aspects like bidding regulations, market clearing, pricing, and real-time imbalance penalties. A detailed modeling and simulation methodology is developed to provide reliable guidance to the market design. Specifically, a Markov Game model and a novel Recurrent multi-agent policy proximal optimization (MAPPO) algorithm are proposed for simulating bidding games, with efficient computational performance and consistence with real-world market operation. Finally, a case study is conducted to demonstrate how to use the simulation results as market operation performance indicators, to guide the market design optimization.