Abstract
The general design for the real-time electricity market presented in this paper optimizes and prices both real and reactive power simultaneously in an AC setting, where all assets—generation, load and transmission—are allowed to bid and are financially settled at the locational price times energy consumed or produced. The result is that transmission lines are compensated for both capacity and admittance, providing incentives for efficient operation of transmission-related assets such as FACTS devices, if price-taking behavior is assumed. Losses are incorporated into the design and become an operating cost for transmission. The market design is shown to be revenue neutral and, under some assumptions, nonconfiscatory.
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O’Neill, R.P., Fisher, E.B., Hobbs, B.F. et al. Towards a complete real-time electricity market design. J Regul Econ 34, 220–250 (2008). https://doi.org/10.1007/s11149-008-9062-3
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DOI: https://doi.org/10.1007/s11149-008-9062-3