Purchase allocation and demand bidding in electric power markets

The purchase allocation problem is one of the most important problems faced by an electric energy service provider under new market environments. The optimal purchase allocation problem for dual electric power markets and demand bid generation are discussed in this paper. The price volatility is explicitly considered in purchase allocation problems and the sequential nature is modeled by conditional stochastic characteristics. An analytical solution for the optimal allocation is derived with given demand and statistical characteristics of the market prices. The method for generating demand bids for purchaser based on market allocation and price forecasting is then developed. The numerical simulations for market allocation and bid generation are demonstrated based on the actual data of the U.S. California Power market.