Conceptual study on applying optimal control theory for generator bidding in power markets

Generator strategic bidding problem in deregulated power markets has been well studied, but the common drawback is that all of them only consider the generators' myopic behavior. Considering the market dynamics and generators' long-term optimization behavior, this paper presents a conceptual and pioneer study on applying the optimal control theory for the generator bidding in power markets. In particular, the system demand is treated as a periodic function, and the generator bidding process is modeled as a dynamic, nonlinear and feedback system, where the market clearing price is the feedback signal. After that, it is assumed that one supplier will make the long term optimization, then its output is taken as the system control variable, and other generators' outputs are taken as the system state variables, and the market clearing price is the system output. Doing so, a standard optimal control problem is obtained, and a software package MISERS is used for numerically solving it. The performance of optimal control is studied, and a complete sensitivity analysis of system parameters is given with some interesting conclusions obtained.