Dynamic coupling between power markets and power systems

Dynamic representation of power markets provide insight into market behavior that is not available in static models. Under the assumption of continuous market updates, this work examines the coupled system that results when market driven response of generation and load interacts with the physical dynamics of governors, turbines, and generators, and the network power flow. Numerical stability analyses formed for the New England 39 bus test system, and plausible scenarios are presented in which the decoupled components (market dynamics alone, physical dynamics alone) are each stable, yet the coupled system is unstable. The general observation that two individual stable systems may be coupled to create an unstable system is commonplace. However, the existence of such scenarios in realistic models of power markets coupled with grid dynamics has significant policy implications for ongoing efforts to design power markets structures and electromechanical system controls complementary to these markets.