Abstract
This paper proposes a model of real-time electricity market in energy management system, and discusses how to decide the price of electricity. We consider a linearized AC model of power grid with direct current process and propose a novel decision procedure of price of electricity based on gradient methods. First, we use a behavioral model of consumer and supplier based on maximization of their usage in response to price signal. Then, we discuss optimal pricing of electricity that maximizes the social welfare determined by Independent System Operator (ISO). Third, we propose a market algorithm based on the gradient method of dual function, in which ISO does not need all information for a decision of the electricity price. Finally, simulation results show effectiveness of the proposed model representation and the dynamic pricing methodology.
