A Dynamic Mechanism for Wholesale Energy Market: Stability and Robustness

In this paper, a dynamic model of the wholesale energy market that captures the effect of uncertainties of renewable energy sources and real-time pricing with demand response is derived. Beginning with a framework that includes real-time pricing as an underlying state, an attempt is made in this model to capture the dynamic interactions between generation, demand, locational marginal price (LMP), and congestion price near the equilibrium of the optimal dispatch. Conditions under which stability of the market can be guaranteed are derived. Modeling the effect of renewable energy resources (RERs) and demand response as perturbations, robust stability of the energy market model in the presence of such perturbations is discussed. Numerical studies of an IEEE 30-bus are reported to illustrate the effect of transmission lines constraints on the wholesale market stability in the presence of wind power.