Design of Incentive Functions for Market Monitoring and Control of Electric Energy Services

A. Keyhani (USA)


Leader-follower, electric energy market, incentive functions.


The collapse of the California electric energy market has made it imperative to recognize that market forces motivated by profit cannot guarantee a secure and reliable energy supply because of the inherent characteristics of electric energy production, transmission and distribution networks. In this paper, an approach based on the Stackelberg market design strategy developed in the 1970’s. will be used to show how the state energy board can restructure the market such that the ISO as a leader can attain perfect market prices for the energy and ancillary services control and monitor the energy market.

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