operation of electricity markets

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ELECTRICITY MARKETS

MOHAMMED PITHAPURSNEHA CHERUVATTATH

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ELECTRICITY MARKETS20 YEARS OF EVOLUTION

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REGULATED MONOPOLY MODEL

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WHOLESALE & RETAIL COMPETITION

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ORGANIZED ELECTRICITY MARKETS (NORTH AMERICA)

• Ten Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) serve 66% of consumers in the U.S. and more than 50% of Canada’s population.

Source: ISO/RTO Council website www.isorto.org

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LOCATION MARGINAL PRICE

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LMP: NO CONSTRAINTS

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LMP: NO CONSTRAINTS

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LMP: NO CONSTRAINTS

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LMP WITH CONSTRAINTS

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LMP WITH CONSTRAINTS

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LMP WITH CONSTRAINTS

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LMP WITH TRANSMISSION LOSSES

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AUCTION

• Suppliers are selected to supply power for certain time along with price and other terms • Organized by RTO: Regional Transmission Organizations• Some places distribution utilities have auctions to supply basic service

customers

• Proposed change from uniform price to pay as bid auction

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Uniform Price Auction

Gen A Gen B Gen C05

101520253035

10

20

30

MW Generated

$/M

Wh

Pay As Bid Auction

Total Cost:

Gen A Gen B Gen C0

5

10

15

20

25

30

35

10

20

30

MW Generated

$/M

Wh

DEMAND: 20 MW

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Source: NYISOwww.nyiso.com

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SIMULATION

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SIMULATION

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Tomorrow’s Electricity Markets!!!

• Large number of traders (maybe millions)• Some with a physical position as supplier and consumer• Making lots of transactions (several times a minute)• Over the entire supply time scale (long, years-out to real-time)• Across the entire network (generator bus to end-use device)

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REFERENCES

• https://en.wikipedia.org/wiki/Electricity_market• https://en.wikipedia.org/wiki/California_electricity_crisis• https://www.eia.gov/Energyexplained/index.cfmpage• https://www.fortnightly.com/fortnightly/2008/03/pay-bid-vs-uniform-p

ricing• https://www.epsa.org/industry/primer/wholesaleMarket