MISO Unlocks Billions in Savings Through the Application of Operations Research for Energy and Ancillary Services Markets

Abstract

Over the past few years, the Midwest Independent Transmission System Operator, Inc. (MISO) has transformed the electric utility industry in 13 Midwestern US states through the development and implementation of energy and ancillary services markets. MISO uses mixed-integer programming to determine when each power plant should be on or off. Operations research methods set energy output levels and establish the prices at which energy trades. These new markets increased the efficiency of the existing electric infrastructure (power plants and transmission lines) in the Midwest, improved the reliability of the grid, and reduced the need for future infrastructure investments. These advances enabled the MISO region to realize between $2.1 billion and $3.0 billion in cumulative savings from 2007 through 2010. We expect additional savings of $6.1 billion to $8.1 billion through 2020.

Designing Coalition-Proof Reverse Auctions Over Continuous Goods

“…Constrained optimization problem (1) defines a general class of reverse auction models. Several current market problems such as stochastic energy market mechanisms [6,7,9,16,[32][33][34] and energy reserve co-optimized markets [8,15,[35][36][37][38][39] can be cast within this model. 1 The constraints may correspond to procurement of the required amounts of power supplies, for instance, in the Swiss control reserve markets accepted reserves must have a deficit probability of less than 0.2%.…”

“…In this paper, we consider mechanism design for reverse auctions that may involve continuous values of different types of goods, general nonconvex constraints, and second stage costs. This is motivated by the fact that several current energy market problems can be cast within this general class of auctions [6][7][8]. Previous work on these markets considers the pay-as-bid mechanism [9] and the locational marginal pricing mechanism [10,11].…”

A Tutorial on Building Policy Models as Mixed-Complementarity Problems

“…From an engineering perspective, this sector is more complicated than the natural gas sector, and the questions to be addressed include market design and the implications for reliability and market power. Carlson et al (2012) discuss how one independent system operator runs a market in the United States after a change from traditional regulation. Other papers on this topic include Boucher and Smeers (2001), Hobbs (2001), Garcés et al (2009), and Ehrenmann and Neuhoff (2009).…”

Demand Response Optimization Based on Building’s Characteristics

“…In time-based programs, customers are requested to reduce demand [5] for an example of time-based programs and [6] for incentive-based programs). Similar to the DR planning problems, the unit commitment problem that determines the start-and-stop control for electric power systems in utility companies that balances the demand-supply gap of power by controlling multiple generators the utility companies hold is well-known.…”