Demand allocation analysis for energy purchasers in deregulated energy markets

Abstract

In this paper, the problem of optimal demand allocation in deregulated California energy markets is studied. Recently, this commodity has been deregulated into multiple time sequential markets, known as the block forward, the PX day-ahead and day off, and the ISO real-time energy markets. After deregulation, energy purchasers have to purchase energy on an hourly basis. It is challenging to allocate demand in the above energy markets in an optimal fashion. By using a stochastic dynamic programming technique in this study, the problem is resolved and an optimal solution is obtained. The authors derive the optimal demand allocation criterion. With the optimal allocation measurement, it is possible to provide efficient algorithms to divide demand at these time sequential markets.