Reformulation of U.S. Day-Ahead Wholesale Power Markets for Improved Intertermporal Operations
AbstractU.S. Day-Ahead Markets (DAMs) for wholesale electric power managed by Independent System Operators (ISOs) encompass more than 60% of U.S. generating capacity. The current design of these DAMs encourages a focus on decisions that minimize immediate net costs without explicit consideration of pre-DAM and post-DAM decision opportunities. This study proposes a practical DAM reformulation that enables a coupled consideration of past, current, and future energy/reserve procurement processes. The key innovation is the inclusion of ISO-determined virtual supply offers and virtual demand bids into the DAM power balance equations that permit the ISO to plan to satisfy next-day balancing needs by an efficient mix of energy/reserve cleared before, during, and subsequent to the DAM. The proposed reformulation is illustrated for three types of DAMs: a day-ahead energy market; a co-optimized day-ahead energy/reserve market; and a stochastic co-optimized day-ahead energy/reserve market.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 35243.
Date of creation: 26 Jun 2012
Date of revision:
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Day-ahead market; economic dispatch; electrical energy; financial contracts; Forecasting; forward planning; unit commitment; virtual demand bid; virtual supply offer;
Find related papers by JEL classification:
- D4 - Microeconomics - - Market Structure and Pricing
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G1 - Financial Economics - - General Financial Markets
- Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-08 (All new papers)
- NEP-ENE-2012-07-08 (Energy Economics)
- NEP-FOR-2012-07-08 (Forecasting)
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