Nonconvex electricity market design

The ISO market design has evolved over time from traditions, economic theory and power system operations heuristics. Early market designs made simplifying assumptions and analyzed a convex market. With these assumptions, the tendency has been to analyze the markets under the neoclassical market paradigm. Complicating features in market design such as reactive power, unit commitment, pricing and switching of transmission assets and demand participation make the market non-convex and possibly without a core. Market power and lumpy investments present additional complicating factors. ISO market design should be analyzed as a whole before examining the pieces. We examine several methods for analyzing and settling the markets. Also we address the value and role of price signals.