Optimization based bidding strategies in the deregulated market

Abstract

With the deregulation of electric power systems, market participants are facing an important task of bidding energy to an independent system operator (ISO). This paper presents a model and a method for optimization-based bidding and self-scheduling where a utility bids part of its energy and self-schedules the rest as in New England. The model considers ISO bid selections and uncertain bidding information of other market participants. With appropriately simplified bidding and ISO models, closed-form ISO solutions are first obtained. These solutions are then plugged into the utility's bidding and self-scheduling model which is solved by using Lagrangian relaxation. Testing results show that the method effectively solves the problem with reasonable amount of CPU time.