Purchase Allocation and Demand Bidding in Electric Power Markets

The purchase allocation problem is one of the most important problems faced by an electric energy service provider under the new market environment. The optimal purchase allocation problem for dual electric power markets and demand bid generation are discussed in this paper. The price volatility is considered explicitly in purchase allocation problems, and the sequential nature is modeled by conditional stochastic characteristics. Analytical solution for the optimal allocation is derived with given demand and statistical characteristics of the market prices. The method for generating demand bids for a purchaser based on market allocation and price forecasting is developed. The numerical simulation for market allocation and bid generation are shown based on actual data of the U.S. California power market.