Regional Market Formation with PSO

Our state-of-the-art market simulations utilize Power System Optimizer® (PSO), which can accurately capture the many operational and market features that are central to the differences between bilateral power markets with contract-path transactions and centralized wholesale power markets with nodal energy market designs.

We are able to model status quo systems with individual balancing area commitment and dispatch and bilateral contract-path transactions. Our status quo modeling captures the market frictions such as trading margin requirements, 16-hour trading blocks, and the need to arrange transmission on the often-limited contract paths between balancing areas. We are able to contrast realistic simulations of the bilateral market structure with simulations of a “Day-2” regional market design with security-constrained optimized unit commitment and dispatch for both day-ahead and real-time markets, and co-optimized ancillary services markets, capturing both nodal transmission congestion and marginal losses.

Our unique ability to model forecast uncertainty between day-ahead and real-time settlement periods with PSO further enables us to capture the benefits of broader, frictionless, and real-time coordination over broad areas that experience a diversity of unforeseen changes to loads and generation output, especially in markets with high penetration of renewable generation. These benefits are typically missed when assuming no forecast uncertainty.

These advanced modeling capabilities offer increased precision to inform decisions to form an RTO, joining one RTO versus another, or introduce partial RTO-like solutions, such as energy imbalance markets.