Communication limitations in iterative real time pricing for power systems

Iterative, or negotiated, pricing mechanisms have been of interest for decades as a systematic means of operating electricity markets, and have more recently been proposed as a way of dealing with the increased diversity of responsive market participants brought about by smart grid technologies and the increasing share of intermittent energy sources. One possibility is for the market coordinator to communicate iteratively with market participants to determine energy prices, on a receding horizon basis. Until now, little work has been carried out on the practicalities of implementing such pricing mechanisms, and yet because a market outcome must be cleared in real time, adequate communication speed and reliability is essential. The authors present a model of lossy and delayed communication over a network for such a negotiated pricing mechanism, derived from practical consideration of message timing, collection strategies and security. The convergence of the algorithm to an optimal dispatch is shown to be quite robust to frequent communication failures and delays. Results are demonstrated for price negotiation over a 20-step time horizon on a densely-populated IEEE 39 bus network.