Analysis of Spot Prices Arrangements in Deregulated Electricity Market

The absence of central coordination in deregulated electricity markets sets a new range of challenges to their organization and functioning. Although a lot of academic research has been done in the recent years on these topics, contributions and discussions tend to stay within a single field of policy analysis. The fundamental factors in the operation of electrical power systems, at a macro level, are distribution of the operation parameters over vast areas, dominance of human factors and high dimensionality of the problem. Economics and stability are two disjoint areas of electrical power system operation. Economic operation of power systems is a complex problem of decision management because of distributed nature of the information, dominance of human factors and high dimensionality of the state space. The new deregulated market environment has rendered this management even more complex. Contemporary power system operation is based on the idea of a central load dispatch center (CDO). The data arriving in the CDO from all over the system, is although useful for system stability, is of little value for the short term economic operation. Interconnection of independent power producers (IPP) has increased the state space to the level of combinatorial explosiveness, while recent development of multiple fuel plants has added to the dominance of the human factor. Distributed client-server databases, artificial intelligence, internet and the intranets are emerging information technologies that can be effectively utilized to address these problems. Distributed economic operation is a new area of research.