Cascading failures in electric power systems: What about prices?

Given the incidence of blackouts during recent years, there has been an increased interest in understanding them to take corrective or mitigating measures, limiting their occurrence and scope in the future. Different models have been proposed to represent these sequences of events. The power tails found by some researchers in the latest North American blackout size distribution have led them to think of power systems as complex dynamical systems, drifting away from more traditional electric power system reliability models. The main contributions of this paper are: (a) Briefly review different models of blackouts and cascading in power systems, (b) Identify the role that electricity spot prices should have in those models, and (c) Enlarge one of the existing models by modeling prices and its role in the development of the system in a computationally efficient way. We conclude that the representation of an evolving market is perfectly compatible with the idea of understanding power markets/systems as complex dynamical systems. We also provide arguments supporting the idea that those markets and prices must be a part of any cascading models, especially if they model any longer-term system evolution.