INCLUSION OF RESERVE OFFERS WITH PRICE SWING

This chapter demonstrates that the optimization of a swing‐contract market M(T) can still be formulated as a MILP optimization, solvable by standard MILP solvers, when performance payment methods included in reserve offers provide “price swing.” Here price swing means that the compensation requested by a dispatchable resource m cleared for power‐path delivery during a time‐step k depends on m's dispatch set point for k. The chapter shows how the ISO's optimization problem for the base‐case swing‐contract market M(T) can be extended to permit the participation of a dispatchable generator m with a general nondecreasing convex avoidable cost function for each time‐step k. The resulting modified optimization problem can be solved using a standard MILP solver.