Dynamic Coupling between Power Markets and Power Systems

Power System Markets represented by dynamic equations provide insights into the market behaviour which are not available from static models. A combination of aggressive energy imbalance regulation and fast response of the market can lead to unstable market conditions. The dynamic properties of the market (as characterized by the eigenvalues of the market dynamic equations) are first determined by representing the power system by means of algebraic equations. Next, the coupling between energy imbalance and market dynamics is studied by modelling the market dynamics together with the electro-mechanical power system dynamics. MATLAB-based software is used to evaluate the eigenvalues of a linearized version of the various models of interest. Numerical results are presented to illustrate the effects of interaction between markets and power system parameters. The main result from this paper is that when a stable market model is combined with a stable electro-mechanical system model, the resulting combined system can exhibit unstable behaviour. The implications of this result are significant: either those designing the rules for market operation must accommodate to the dynamic needs of the system, or those designing system electro-mechanical controls and stabilizers must take into consideration the conditions that will be imposed on the system by operation in a market-driven environment.