Optimization based bidding strategies in the deregulated market

With the deregulation of electric power systems, market participants are fa cing an important task of bidding energy to an Independent System Operator (ISO). This paper presents a model and a method for optimization-based bidd ing and self-scheduling where a utility bids part of its energy and self-sc hedules the rest as in Ne vv England. The model considers ISO bid selection s and uncertain bidding information of other market participants. With appr opriately simplified bidding and ISO models, closed-form ISO solutions are first obtained. These solutions are then plugged into the utility's bidding and self-scheduling model which is solved by using Lagrangian relaxation. Testing results show that the method effectively solves the problem with re asonable amount of CPU time.