Power system security considerations in competitive electricity market design

Power system security and market liquidity in competitive electricity markets are potentially conflicting objectives. A key aspect in successful market operation is the harmonized co-existence of these two different objectives. Ensuring the security of the system is essential for the reliability of the power system. Security also promotes competition in electricity markets by avoiding market disruption. This paper describes in detail the principles of market design to include security assessment in the process of clearing competitive bids and offers, such that the clearing mechanism achieves market objectives of maximizing market merits, without jeopardizing the system security. Several real-life illustrative examples of electricity market designs will be presented; examples that show that successful markets worked in harmony with system security. This paper will also describe the evolution of some of the current electricity markets to better integrate security assessment in the market clearing mechanism