A Control Theorist's Perspective on Dynamic Competitive Equilibria in Electricity Markets*
G. Wang, A. Kowli, M. Negrete-Pincetic, E. Shafieepoorfard, and S. Meyn
*See also the sequel, Real-time Prices in an Entropic Grid
Abstract: We are moving towards a radical transformation of our energy systems. The success of the new paradigm created by the Smart Grid vision will require not only the creation and integration of new technologies into the grid, but also the redesign of the market structures coupled with it. In order to design the market structures for the grid of the future, economic models able to capture the new physical reality are the first requirement. In this paper, we present a general economic equilibrium model that refines standard economic models by including dynamics, uncertainty in supply and demand, and transmission constraints. The main finding is that the dynamical characteristics of the efficient equilibria can be highly undesirable for consumers, suppliers, or both. Moreover, we show that transmission constraints can exacerbate these characteristics.
See also the recent survey Dynamic Competitive Equilibria in Electricity Markets - bibliographic information can be found below.
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| Electricity prices in Texas and New Zealand in 2011: These two incidents resulted in investigations in their respective communities. In New Zealand, the Electricity Authority has recently responded by retroactively reversing the prices to roughly one-tenth of the peak value, since these high prices threatened to undermine confidence in, and ... damage the integrity and reputation of the wholesale electricity market. |
Survey & Panel Lecture, PES, July, 2011
Presentation, New England ISO, July, 2010
Newton Institute Tutorial and Panel Lecture, May, 2010 (see also the Cambridge website)
References
@inproceedings{wankownegshamey10,
Title = {A Control Theorist's Perspective on Dynamic Competitive Equilibria in Electricity Markets},
Address = {Milano, Italy},
Author = {G. Wang and A. Kowli and M. Negrete-Pincetic and E. Shafieepoorfard and S. Meyn},
Booktitle = {Proc. 18th World Congress of the International Federation of Automatic Control (IFAC)},
Year = {2011}}
@incollection{wannegkowshameysha11b,
Title = {Dynamic Competitive Equilibria in Electricity Markets},
Author = {Wang, G. and Negrete-Pincetic, M. and Kowli, A. and Shafieepoorfard, E. and Meyn, S. and Shanbhag, U.},
Editor = {A. Chakrabortty and M. Illic},
Publisher = {Springer},
Booktitle = {Control and Optimization Theory for Electric Smart Grids},
Year = {2011}}
@unpublished{wankownegshameysha11,
Title = {Real-time Prices in an Entropic Grid},
Author = {G. Wang and M. Negrete-Pincetic and A. Kowli and E. Shafieepoorfard and S. Meyn and U. V. Shanbhag},
Note = {Submitted to {2011 IEEE CDC}},
Year = {2011}}
@inproceedings{negmey11,
Title = {Intelligence by Design for The Entropic Grid},
Author = {M. Negrete-Pincetic and S.P. Meyn},
Booktitle = {IEEE PES 11: Power Energy Society General Meeting},
Year = {2011}}
@inproceedings{meynegwankowsha10,
Title = {The Value of Volatile Resources in Electricity Markets},
Author = {Meyn, S. and Negrete-Pincetic, M. and Gui Wang and Kowli, A. and Shafieepoorfard, E.},
Booktitle = CDC2010,
Pages = {1029 -1036},
Year = {2010}}
@article{chomey10,
Author = {I.-K. Cho and S. P. Meyn},
Title = {Efficiency and marginal cost pricing in dynamic competitive markets with friction},
Journal = {Theoretical Economics},
Number = {2},
Pages = {215-239},
Volume = {5},
Year = {2010}}
@unpublished{chomey09a,
Author = {Cho, I.-K. and Meyn, S. P.},
Note = {Submitted for publication, {SIAM J. Control and Optimization.}},
Title = {A Dynamic Newsboy Model for Optimal Reserve Management in Electricity Markets},
Year = {2009}}
@article{chechomey06a,
Author = {Chen, M. and Cho, I.-K. and Meyn, S.P.},
Journal = {Automatica},
Month = {August},
Pages = {1267-1281},
Title = {Reliability by design in a distributed power transmission network},
Volume = {42},
Year = {2006}}
@article{chomey07,
Author = {Cho, In-Koo and Meyn, S.},
Journal = {Decision and Control, 2007 46th IEEE Conference on},
Month = {Dec.},
Pages = {771-778},
Title = {Efficiency and marginal cost pricing in dynamic competitive markets with friction},
Year = {2007}}
@inproceedings{chomey03b,
Author = {Cho, I.-K. and Meyn, S. P.},
Booktitle = {Proceedings of the 42nd IEEE Conference on Decision and Control},
Month = {December 9-12},
Pages = {2094- 2099},
Title = {The dynamics of the ancillary service prices in power networks},
Volume = {3},
Year = {2003}}
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