A reformed capacity subscription market in restructured power systems

Abstract

This article tries to introduce a demand side bidding strategy in capacity market alongside a pay as bid capacity market where consumers compete with each other in order to purchase apart of their required capacity during peak periods. The method can be widely used in upcoming smart grids where smart counters are deterrent to prevent consumers to use electricity more than the predefined level. The new model is proposed due to two main disadvantages of existed Capacity Subscription (CS) model which are counted as Independent System Operator's (ISO) unlimited interference in the market and consumers' extremely limited authority in the market procedure. In this market consumers deliver their capacity bids contain of capacity price and optimum capacity level obtained from proposed bidding strategy to the ISO. Simultaneously, producers voice their available capacity levels in the time of peak period to the ISO. ISO clears the market considering the proposed capacity levels of the generation side and capacity bids of the demand side. Consumers which are accepted in the market buy the capacity according to their offered prices and each consumer is only allowed to use electricity up to its market admitted subscribed capacity level. Producers are paid with a global price which is determined considering consumers' offered capacity prices.