  The expected increase in the penetration of renewables in the approaching
decade urges the electricity market to introduce new products - in particular,
flexible ramping products - to accommodate the renewables' variability and
intermittency. CAISO and MISO are leading the design of the new products.
However, it is not clear how such products may affect the electricity market.
In this paper, we are specifically interested in assessing how the new products
distort the optimal energy dispatch by comparing with the case without such
products. The distortion may impose additional cost, which we term as the
"distortion cost". Using a functional approach, we establish the relationship
between the distortion cost and the key parameters of the new products, i.e.,
the up and down flexible ramping requirements. Such relationship yields a novel
routine to efficiently construct the functions, which makes it possible to
efficiently perform the minimal distortion cost energy dispatch while
guaranteeing a given supply reliability level. Both theoretical analysis and
simulation results suggest that smartly selecting the parameters may
substantially reduce the distortion cost. We believe our approach can assist
the ISOs with utilizing the ramping capacities in the system at the minimal
distortion cost.
