  Among the many challenges of integrating renewable energy sources into the
existing power grid, is the challenge of integrating renewable energy
generators into the power systems economy. Electricity markets currently are
run in a way that participating generators must supply contracted amounts. And
yet, renewable energy generators such as wind power generators cannot supply
contracted amounts with certainty. Thus, alternative market architectures must
be considered where there are aggregator entities who participate in the
electricity market by buying power from the renewable energy generators, and
assuming risk of any shortfall from contracted amounts. In this paper, we
propose auction mechanisms that can be used by the aggregators for procuring
stochastic resources, such as wind power. The nature of stochastic resources is
different from classical resources in that such a resource is only available
stochastically. The distribution of the generation is private information, and
the system objective is to truthfully elicit such information. We introduce a
variant of the VCG mechanism for this problem. We also propose a non-VCG
mechanism with a contracted-payment-plus-penalty payoff structure. We
generalize the basic mechanisms in various ways. We then consider the setting
where there are two classes of players to demonstrate the difficulty of auction
design in such scenarios. We also consider an alternative architecture where
the generators need to fulfill any shortfall from the contracted amount by
buying from the spot market.
