Generalized uplifts in pool-based electricity markets: coordinating time-dynamic markets

The electricity pool is a fundamental coordination mechanism for scheduling short-term forward electricity markets. It is fundamental theoretically in the sense that its main goal is the best use of society's resources subject to basic reliability criteria. However, the pool scheduling and its associated marginal pricing procedure may not be able to unambiguously coordinate its self-interested participant generators. In other words, the centrally-determined operation and marginal price schedules may not lead to a competitive equilibrium. Several out-of-market mechanisms have been proposed to bridge the objectives of the pool with those of the market players. Among them are uplifts whose current use still does not induce true competitive equilibria. In this chapter, generalized uplifts are proposed as an alternative to traditional uplifts. An innovative mechanism to compute the generalized uplifts is developed. A simple illustrative example is presented.