A JAVA/MATLAB SIMULATOR FOR POWER EXCHANGE MARKETS J. Contreras*, Member, IEEE A. Losi**, Member, IEEE M. Russo**, Member, IEEE *E.T.S. de Ingenieros Industriales – Universidad de Castilla-La Mancha – Ciudad Real, Spain **Dipartimento di Ingegneria Industriale - Università degli Studi di Cassino – Cassino, Italy – e-mail:russo@unicas.it Abstract: The discussion about the pros and cons of several proposed auction models in electricity markets is still open. Any proposal on the structure of a deregulated electric energy industry should be supported by scientific foundation and by intensive simulations to assess both the economical aspects and the technical issues. Based on the general structure of a power system and market simulator that has been recently proposed, this paper presents a simulator of Power Exchange Markets. Bidding proposals are defined in a JAVA-based environment, in which communication between the producers/consumers and the auction regulator is simulated. A MATLAB application, which is interfaced to the JAVA environment by a Tcl program, works out the market clearing price together with the quantities that each bidder is allowed to buy or sell. The simulator is extremely flexible and useful to compare the performance of Power Exchange Markets adopting different methods of treating technical and security constraints in the MATLAB application. A significant numerical example is presented to highlight the features of the tool. Keywords: simulation software, deregulation, power exchange market. I. INTRODUCTION The process of deregulation in the power industry has created a new environment where trading is conducted in different markets. In this environment, power producers compete to obtain higher market share through spot market and bilateral contracts. In the spot market, market clearing prices are based on bids submitted by suppliers and consumers. Bidding and clearing of the spot market are based on the auction market structure, in the following referred to as Power Exchange Market (PXM). Many countries have adopted simple auction matching algorithms as part of their electricity pool design [1]. The simple auction receives the day-ahead supplier and consumer hourly bids and produces the hourly schedule and market price in one round. However, this simple method fails to capture inter-temporal links and other complex effects that appear in power systems, such as ramp rates, start-up cost, no-load cost, etc.; it has to rely completely on market participants’ ability to reflect their economical characteristics into their bids to achieve a feasible dispatch. The simple auction structure can be modified to take into account technical constraints and power system non linearity. For instance, in the Spanish market supplier bids are allowed using additional conditions besides price and quantity (semi- complex auction). These additional conditions include: non- divisible quantity bids, minimum daily income and up-and- down ramp rates in order to help the algorithm to take into account the suppliers’ requirements [2]. On the other hand, other countries have adopted an iterative auction structure (i.e. repeated simple auctions) to give market participants more than one opportunity to reflect accurately their operating conditions into their bids. The iterative set of rules proposed for the energy market in California by Wilson [3] is the foremost example of such a structure. To accurately evaluate the impact of different market structures and rules on the performance of the market and on the operation of the power system, intensive simulation is needed. It has to yield detailed results on both the economical and the technical objectives of the system operation. Simulation must account for the effects of technical constraints, of power system non linearity, of different auction rules and of different methods to take into account transmission network security. Simulation is also necessary to ascertain the characteristics of the information and decision-making structures. In a recent paper [4], the open structure of a software simulator, capable of highlighting the details of the operation on both the sides of economics and system security in any market structure, has been presented. It is based on the object oriented paradigm to allow the user to easily modify and extend parts of the software with minimal impact on the other parts and to interface the package to existing software tools for specific computations. In such a way, the software simulator is modular, and has the desirable characteristic of being conducive to cooperation. The different modules the simulator is made of are intended to clearly represent the different agents acting on the stage. Taking advantage of such an open structure, this paper presents a simulator of PXMs. Suppliers and consumers bid in a pool: their interactions and communications are simulated on the JAVA platform. The market clearing algorithm is implemented in MATLAB so that different methods of solving the clearing price problem and of taking into account technical constraints can be easily programmed and tested. Data exchange and synchronization between the JAVA and the MATLAB processes is performed by a Tcl interface. A significant numerical example is shown to highlight the features of the simulator. II. PXM SIMULATOR STRUCTURE The PXM simulator design is based on the Object Oriented Paradigm (OOP) so that each part of the package could be developed at its best by using the most adequate environment, 0-7803-6681-6/01/$10.00 © 2001 IEEE 106