Optimal procurement of contingency and load following reserves by demand side resources under wind-power generation uncertainty

System operators must consider events that cause disturbances in the balance between the output of the generators and the load demand in their short-term operations. Transmission line failures, generating unit outages, and intrahour load deviations are such events. The means of confronting them is the scheduling and the deployment of reserves on a market basis. On top of these factors, the increasing penetration of renewables and especially wind-power generation has increased the frequency of deployment and the magnitude of required reserves. Traditionally, reserves have been procured by appropriately adjusting the output of the generating units; however, a broad range of demand-side resources are also qualified to provide ancillary services. The subject of this chapter is the development of a two-stage stochastic joint energy and reserve market structure that incorporates demand-side resources in order to procure the required reserve services in a reliable and economically optimal manner.