Running a More Complete Market With the SLP-IV-ACOPF

The ACOPF is at the core of competitive electricity market design. It is the only ac-based algorithm that simultaneously co-optimizes real and reactive power dispatch for steady-state operations on ac power systems. In practice, independent system operators (ISOs) oversimplify the physical problem and settle the markets on locational marginal price (LMPs) based on real power but do not price reactive power dispatch or voltage control. This work proposes a market dispatch and pricing procedure based on the ACOPF to provide a more complete pricing mechanism. We formulate the dual problem of the SLP-IV-ACOPF as shown in [1], which is a successive linear program shown to solve the ACOPF to an acceptable quality of convergence to a best-known solution with linear scaling of computational time in proportion to network size. Therefore, the dual problem is also a linear program; as a result, the marginal value pricing of the optimal solution to the dual problem supports the market dispatch due to strong duality, i.e., this solution technique results in a revenue adequate and more complete market design. Furthermore, we show how to distribute the complete real-time market settlements. The analysis includes a direct comparison to DCOPF-based approaches similar to those applied in current ISO markets.