Electricity market Clearing

Methodology and Pricing

Introduction
• In a wholesale electricity market multiple products that may not be
very distinctive from one another are being traded over multiple time
periods using several different mechanism.
• Here electricity market characteristics are described to give a sense of
the number of choices that are available in designing an electricity
market.
• A small system model is used to illustrate the basic characteristics.
Small test system
Cont.
• Supply Bid:

• Demand Bid:
Cont.
• Transmission System Constraints:
Central Auction
• There are two distinctive mechanism:
1. The central auction
2. The bilateral trading
• In a centralized auction suppliers and customers both submit bids to a
central pool or exchange and from these bids the market clears.
• Here only central auction mechanism is considered. In later classes,
bilateral auction will be dealt in detail.
Bidding
• Bidding into a simple central auction is similar to the process of each
generator submitting cost data and each load submitting utility data.
• This data is used to dispatch the system.
• The cost curve and incremental cost curve for the small test system
are given as:
Cost curve
Incremental cost curve
Market Clearing and Pricing
Cont.
• The market clearing can be expressed mathematically as:

• Subject to:
Results