Global optimization in an electricity market environment

The competitive market environment for the power industry has resulted in new optimization problems that need to be solved such as bidding, pricing, risk management, and market clearing. These problems are complicated by the fact that power systems are nonlinear and some aspects of the problem are ill-formulated. In this paper, we report our formulation of a market clearing optimization problem that maximized the social welfare. The market optimization is solved for cases where the market participants have private information about their generation costs. The proposed formulation incorporates the nonlinear nature of the MW power flows on the transmission grid. The IEEE 30-bus system is modified and used for testing of the proposed techniques.