  With increasing renewable penetration in power systems, a prominent challenge
in efficient and reliable power system operation is handling the uncertainties
inherent in the renewable generation. In this paper, we propose a simple
two-settlement market mechanism in which renewable power producers (RPPs)
participate, so that a) the independent system operator (ISO) does not need to
consider the uncertainties of the renewables in its economic dispatch, and yet
b) the market equilibrium is shown to approach social efficiency as if the ISO
solves a stochastic optimization taking into account all the uncertainties. In
showing this result, a key innovation is a new approach of efficiently
computing the Nash equilibrium (NE) among the strategic RPPs in
congestion-constrained power networks. In particular, the proposed approach
decouples finding an NE into searching over congestion patterns and computing
an NE candidate assuming a congestion pattern. As such, the computational
complexity of finding an NE grows only cubically with the number of RPPs in the
market. We demonstrate our results in the IEEE 14-bus system and show that the
NE approaches social efficiency as the number of RPPs grows.
