Design, Structure, and Operation of an Electricity Market

This chapter covers the basic designs, structures, and operations of electricity markets. There are many possible ways or schemes that are currently used to trade or contract electricity among sellers and buyers. The most common forms of electricity trading are bilateral contracts, power pool model, power exchange model, or some sort of combination. Energy markets generally include day‐ahead market, real‐time market, and intraday markets. Two‐settlement market provides market participants with the option to participate in a forward market for electric energy in the electricity market. The chapter illustrates examples related to the timeline process for different markets. It describes the computational tools that are used for each process for both real‐time and day‐ahead markets. The chapter presents security‐constrained economic dispatch, reliability unit commitment, and the network security analysis. The chapter discusses financial transmission rights of electricity market, capacity markets and ancillary service markets.