A Study of Power Market Dynamics Based on System Dynamics Modeling

In the market operation, it is a very important task to effectively master and manage the dynamic behaviors of power market. In the dynamic modeling of power market, the dynamic models only describe the simple relationship between supply and demand, not to reflect complex market behavior, and thus are out of accord with actual power market. In order to take into account the complex relationship among market participants and more accurately reflect the actual power market dynamics, in this paper the system dynamics (SD) is introduced, and further the system dynamics modeling for power market is proposed, which consists of internal and external structure among the generation, load and operation institute governing the wholesale power market based on many nonlinear differential equations with feedback and time delays. The dynamic behaviors of market variables such as the construction capacity of new power plants, system capacity, generation quantities, demand quantities and electricity price are simulated. The simulated dynamic evolution of California power market shows the validity and feasibility of the proposed system dynamics model.

I. Introduction

The power industry has been undergoing a fundamental market reformation of deregulation and competition in order to reduce the cost and price of monopoly industry and improve the social benefit. In the market operation, it is a very important task to effectively master and manage the dynamic behaviors of power market, especially for the power market whose reformation is performed just now and not mature and perfect, it becomes more urgent and necessary. For example, in the California power market, the investigation of market dynamic behaviors was ignored so that the severe situation occurred that the electricity price rose sharply and the power of consumers was cut by turns during less than three years of operation, which has a great effect on the economy of California and even USA.