Reformulation of U.S. Day-Ahead Wholesale Power Markets for Improved Intertermporal Operations

Leigh Tesfatsion () and Dionysios Aliprantis

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: U.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.

Keywords: Day-ahead market; economic dispatch; electrical energy; financial contracts; Forecasting; forward planning; unit commitment; virtual demand bid; virtual supply offer (search for similar items in EconPapers)
JEL-codes: D4 D8 G1 Q4 (search for similar items in EconPapers)
Date: 2012-06-26
New Economics Papers: this item is included in nep-ene and nep-for
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http://www2.econ.iastate.edu/papers/p15243-2012-06-26.pdf (application/pdf)
http://www2.econ.iastate.edu/tesfatsi/DAMReformulation.LatestVersion.pdf (application/pdf)

Related works:
Working Paper: Reformulation of U.S. day-ahead wholesale power markets for improved intertermporal operations (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:35243

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