Distributed optimization decomposition for joint economic dispatch and frequency regulation

Networked markets typically operate on multiple time scales. For example, electricity markets are split into slow timescale economic dispatch and fast timescale frequency regulation markets. Nevertheless, the different time scales are typically viewed as fundamentally different problems and hence are studied separately. In this paper, we frame and study a joint problem that optimizes both slow and fast timescale resources in electricity markets. We provide necessary and sufficient conditions under which the joint problem can be decomposed without loss of optimality into slow and fast timescale problems. These slow and fast timescale problems have appealing interpretations as the economic dispatch and frequency regulation problems respectively. Moreover, the fast timescale problem can be solved using a distributed algorithm that preserves the stability of the network during transients. We apply our result to propose an efficient market mechanism for coordinating economic dispatch and frequency regulation resources.