Coordinated Transaction Scheduling in Multi-Area Electricity Markets: Equilibrium and Learning

Abstract

Tie-line scheduling in multi-area power systems in the US largely proceeds through a market-based mechanism called Coordinated Transaction Scheduling (CTS). We analyze this market mechanism through a game-theoretic lens. Our analysis characterizes the effect of market liquidity, market participants' forecasts about inter-area price spreads, transactions fees and coupling of CTS markets with up-to-congestion virtual transactions. Using real data, we empirically verify that CTS bidders can employ simple learning algorithms to discover Nash equilibria that support the conclusions drawn from equilibrium analysis.