Balanced auction mechanism for electric power markets

One of the most important issues in electric power market design is to create an appropriate auction mechanism. A well-designed auction mechanism should find a reasonable balance between market efficiency and equity. This paper discusses the relationship between supplier bid cost minimization and market efficiency and that between consumer payment minimization and market equity. A balanced auction mechanism based on multi-objective function is presented to have a balanced consideration of efficiency and equity. A framework incorporating supplier bid cost unit commitment and consumer payment dispatch is applied to address this issue and a new method based on multilevel ordering is developed to solve this problem. Numerical testing results show that this method is efficient and the new model can appropriately balance the market efficiency and the equity.