Uniform and complex bids for demand response and wind generation scheduling in multi-period linked transmission and distribution markets

• Main Authors: Caramanis, M. C., Foster, J. M.
• Format: Conference Proceeding
• Language: English
• Subjects: Batteries; ISO; Nash equilibrium; Propagation losses; Vehicle dynamics; Wind farms; Wind forecasting
• ISSN: 0191-2216
• DOI: 10.1109/CDC.2011.6161249

Power markets serving 70% of US load operate today on period-specific uniform price-quantity bids (UPQBs). However, UPQBs result in a poor representation of utility accruing to many multi period market participants. UPQB can adequately represent utility of consumption only under the restrictive condition that it is additively separable over time. In fact, the additive separability condition is particularly untrue for emerging smart-grid-enabled flexible demands with storage-like characteristics such as EV battery charging and HVAC. We claim that such types of flexible demand exhibit a utility of consumption related to a period-specific state variable - e.g. the battery charge state - whose dynamics are a function of past consumption trajectories. We also claim that wind generation should not be only credited for its energy bids; it should be also charged for the incremental reserves that the Independent System Operator (ISO) must procure to secure system integrity against bids based on volatile wind output forecasts. Appropriate debiting and charging rates equal the market clearing prices resulting from co-optimizing energy and reserve costs. We argue that flexible demand and wind farms that participate in the day-ahead market by submitting UPQBs are motivated to self-dispatch on the basis of energy and reserve clearing price trajectory forecasts. Since actual clearing prices may differ significantly from the forecasts used in the self-dispatch, oscillatory behavior can easily result if actual clearing prices are used as the next forecast. Nevertheless, a smoother price forecast updating process can lead towards Nash Equilibrium. The paper's contribution is the proposal of tractable complex bid rules that (i) allow market participants to reveal their true inter temporal utility of consumption and their net revenue from wind generation, and (ii) enable the market operator to compute the actual Nash equilibrium in a single solution of the market clearing algorithm. The tractability and reasonableness of the complex bid rules are demonstrated through numerical examples.