Proposal for a Real-time Market based on the Indian Experience of Frequency Linked Prices

In this paper we propose a new approach for handling intra-hour unscheduled interchanges in a deregulated market. This new balancing mechanism is similar to a tariff scheme working successfully in India since 2002 and is based on real-time price signals derived from frequency. The advantage of this approach in comparison to conventional balancing mechanisms is that it is simple, decentralized, economical and less prone to gaming. The generators and loads under this framework can self-schedule themselves based on real-time price signals maximizing their benefit. The price-frequency curve is designed in a manner that this mechanism results in automatic control of frequency within a specified range without any need for a centralized secondary control. This scheme does not require any additional control and communication infrastructure as price is communicated by means of frequency that can be sensed anywhere in the grid. This scheme will make it easier to incorporate distributed and renewable sources of energy in the grid. It would also facilitate demand management by automatic price based load control.