Day ahead energy market and Reliability Unit Commitment: An integrated approach

The restructured electricity markets typically involve a Day-Ahead Market (DAM), which clears bid-in demand that may be generally different (lower) than the demand forecast. This difference gives rise to reliability concerns to the Independent System Operators (ISOs), which are addressed with the deployment of a mechanism that is usually called Reliability (or Residual) Unit Commitment (RUC). Currently, the ISOs execute the RUC process after the DAM application, to procure additional resources, beyond the DAM energy schedules, to meet the demand forecast. In this paper, we compare the currently employed sequential approach, with a proposed integrated approach which combines the functionality of the DAM and the RUC into one market application. We present the market model including all market commodities, namely energy, ancillary services and RUC capacity, for both methodologies, and apply them on a realistic test case, using actual market/system data. We derive quantitative and qualitative results for a practical system, which illustrate the value of the integration of the market and the reliability functions in the forward spot market. The key conclusion from our simulation runs, is that the integrated approach offers substantial efficiencies by procuring all DAM products simultaneously.