Designing an Integrated Combinatorial Auction for Energy and Reserves: An Experimental Approach

Diego Aycinena

Truland Building, 4th Floor
April 29, 2007, 08:00 PM to 07:00 PM

Abstract:

Electric power systems require reserves among other ancillary services- to supply energy with reliability and stability. Generation capacity can be used to provide energy or reserves. Thus, demand for ancillary services competes with demand for energy for a given set of generation resources. Here we present three alternative market designs for energy and reserves in a wholesale electric power market: A design of sequential markets for energy and reserves, with two-part pricing for reserves; a design of sequential markets for energy and reserves with implied opportunity cost pricing for reserves; and an integrated combinatorial market for energy and reserves with implied opportunity cost pricing for reserves. We evaluate their properties in an experimental setting and present the results.