Future aspects of modern heuristics applications to power systems

Software tools for bidding decision-making and transaction management are essential applications for electricity market participants. In these new applications, optimization techniques are required in general. The competitive market introduced a great uncertainty in the generation pattern, which is determined by the market. The market uncertainty can not be completely solved by probabilistic methods as the market is relatively new and there is not sufficient data to calculate the probabilities. Heuristics have been used for decision making in the electricity and other markets. Bidding decision making in the spot market is used to illustrate the importance of stochastic optimization and the need for heuristics in the overall solution. In bidding decision making, a player seeks to optimize the profits given the resource constraints, other players' behaviors, market clearing mechanisms, and the forecasted load. In a rigorous optimization approach, a supplier has to determine the amounts and schedules for the spot and bilateral markets. The prices and demands in the spot and bilateral markets are stochastic. The player has to determine the best options for different outcomes of the market. Therefore, stochastic optimization is a natural technique for the bidding decision-making problem.