A day-ahead market model for power systems: benchmarking and security implications

TL;DR

This paper introduces a social-welfare-based day-ahead market model for power systems, analyzing its security implications through cascading failure simulations, revealing significant differences from traditional optimal power flow approaches.

Contribution

It develops a new market model that considers profit-driven behaviors and assesses its security impacts using cascading failure analysis.

Findings

Market dispatch increases demand not served by up to 80% compared to OPF.

Large-scale cascading failures show DNS above 100MW is more likely under market dispatch.

Storage and gas unit dispatches are key factors influencing system security.

Abstract

Power system security assessments, e.g. via cascading outage models, often use operational set-points based on optimal power flow (OPF) dispatch. However, driven by cost minimization, OPF provides an ideal, albeit unrealistic, clearing of the generating units that disregards the complex interactions among market participants. In addition, existing market modeling tools often utilize economic dispatch and unit commitment to minimize total system costs, often disregarding the profit-driven behavior of market participants. The security of the system, therefore, may be overestimated. To address this gap, we introduce a social-welfare-based day-ahead market-clearing model. The security implications are analyzed using Cascades, a model for cascading failure analysis. We apply this model to the IEEE-118 bus system with three independent control zones. The results show that market dispatch leads to an increase in demand not served (DNS) of up to 80% higher than OPF, highlighting a significant security overestimation. This is especially pronounced in large-scale cascading events with DNS above 100MW. A key driver is the increased dispatch of storage and gas units, which can place the system in critical operating conditions. Operators can use this information to properly estimate the impact of the market on system security and plan efficient expansion strategies.