Frequency linked pricing as an instrument for frequency regulation in deregulated electricity markets

This paper presents the design of an automatic balance service market that can act as an effective tool for system frequency control in deregulated power systems. The proposed scheme combines the presently existing manual balancing mechanism, prevailing in some countries, with the conventional automatic generation control, within a bid-based market structure. The participants in this frequency regulation service market are assumed to be responding to frequency linked price signals sent out by the system operator. Optimization models for settlement of the regulation markets have been proposed and dynamic simulation show satisfactory performance of the market.