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A Swing-Contract Market Design for Flexible Service Provision in Electric Power Systems

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  • Li, Wanning
  • Tesfatsion, Leigh

Abstract

The need for flexible service provision in electric power systems has dramatically increased due to the growing penetration of variable energy resources, as has the need to ensure fair access and compensation for this provision. A swing contract facilitates flexible service provision with appropriate compensation because it permits multiple services to be offered together in bundled form with each service expressed as a range of possible values rather than as a single point value. This paper discusses a new swing-contract market design for electric power systems that permits swing contracts to be offered by any dispatchable resource. An analytical optimization formulation is developed for the clearing of a swing-contract day-ahead market that can be implemented using any standard mixed-integer linear programming solver. The practical feasibility of the optimization formulation is demonstrated by means of a numerical example.

Suggested Citation

  • Li, Wanning & Tesfatsion, Leigh, 2018. "A Swing-Contract Market Design for Flexible Service Provision in Electric Power Systems," ISU General Staff Papers 201801010800001020, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201801010800001020
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    1. Bidwell, Miles, 2005. "Reliability Options: A Market-Oriented Approach to Long-Term Adequacy," The Electricity Journal, Elsevier, vol. 18(5), pages 11-25, June.
    2. Chao, Hung-Po & Wilson, Robert, 2002. "Multi-dimensional Procurement Auctions for Power Reserves: Robust Incentive-Compatible Scoring and Settlement Rules," Journal of Regulatory Economics, Springer, vol. 22(2), pages 161-183, September.
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