A control loop approach for integrating the future decentralized power markets and grids

We are facing a restructuring of the power industry towards a smart grid. The vision of the smart grid represents not only the creation of intelligent power supply networks to allow efficient and reliable use of energy resources, but also the redesign of the market structure coupled with it. In order to develop a smart grid-ready power market, the integration of the physical reality of the power grid into the economic market model has been set as the first requirement. To address this problem, we present a feedback control model to interconnect the physical grid and the economic market in a decoupled control loop. Our proposed control loop consists of two subsystems, namely an Optimal Power Flow (OPF)-based physical system and a Continuous Double Auction (CDA)-based economic system. A dynamic coefficient matrix generated by the Locational Marginal Pricing (LMP) algorithm is adopted for the market clearing mechanism to account for the real-time power flow and transmission constraints. Finally, we demonstrate some initial experiments for a feasibility test of the interaction between the proposed physical power system and economic power market.