Greenhouse gases and pollutants control and reduction is one of the most important challenges which is concerned by different governments all around the world. A significant part of these pollutants is due to combustion of fossil fuels in power plants. One of the most effective solutions for solving this problem is the use of renewable power resources as an alternative to fossil fuel resources. Increasing the share of renewable energy resources in energy production portfolios, in addition to improving the environmental conditions, will also lead to the preservation of fossil fuel reserves for future generations. Also, the presence of these power plants in electricity markets will have many benefits, such as increased competition and ultimately lower electricity prices. In spite of many benefits, renewable energy, particularly wind and solar energy, faces challenges for increasing the penetration into the grid and participation in the electricity markets. One of the most important of these challenges is the high cost of investment and also the uncertainty of production. On the other hand, the high penetration of renewable power plants, due to the nature of their stochastic production will create challenges in a sustainable and safe operation of the power networks. The purpose of this thesis is to achieve a mechanism to facilitate the presence of renewable energy power plants in electricity markets with consideration all of the mentioned challenges. In electricity markets, the market regulator is responsible for regulating and determining the mechanism of energy exchanges. Independent System Operator (ISO), as an executive arm of the regulator, operates the network within the framework of the rules and the scope of standards. Therefore, in this thesis, the formulation of the problem is taken from the ISO perspective in order to determine the mechanism of the market and the rules governing it… Keywords: 1-Renewable generation, 2-Electricity market, 3-Uncertainty of Generation, 4-Incentive policies for renewable production
