Regulation and double price mechanisms in markets with friction

Arman C. Kizilkale, Shie Mannor

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

In previous work we modeled the real-time power market as a dynamic system and presented an "efficiency-volatility" trade-off theorem stating that in markets with supply friction, an efficient market must have volatile prices. In this paper we introduce a novel market mechanism for power markets where there are two prices: one for the real-time power market for suppliers who have friction and another for frictionless ancillary supply with a marginal cost higher than that of regular suppliers. We show that for a given level of acceptable price volatility the double price system with the ancillary supplier is more efficient than the single price system without the frictionless ancillary supplier.

Original languageEnglish
Title of host publication2011 50th IEEE Conference on Decision and Control and European Control Conference, CDC-ECC 2011
Pages33-40
Number of pages8
DOIs
StatePublished - 2011
Event2011 50th IEEE Conference on Decision and Control and European Control Conference, CDC-ECC 2011 - Orlando, FL, United States
Duration: 12 Dec 201115 Dec 2011

Publication series

NameProceedings of the IEEE Conference on Decision and Control

Conference

Conference2011 50th IEEE Conference on Decision and Control and European Control Conference, CDC-ECC 2011
Country/TerritoryUnited States
CityOrlando, FL
Period12/12/1115/12/11

All Science Journal Classification (ASJC) codes

  • Control and Systems Engineering
  • Modelling and Simulation
  • Control and Optimization

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