ADVANTAGES OF THE LINKED SWING-CONTRACT MARKET DESIGN
Summary
The Linked Swing-Contract Market Design has the same basic purpose as current US RTO/ISO-managed wholesale power markets: namely, to ensure efficient continual balancing of net load in real-time operations. This chapter reviews the three basic approaches to long-term reserve procurement currently implemented in US RTO/ISO-managed wholesale power markets: namely, scarcity pricing, centrally managed capacity markets, and load-serving entity (LSE) bilateral contract obligations. It explains how SC markets could facilitate the resolution of the revenue insufficiency and merit-order issues causing problems in current US RTO/ISO-managed wholesale power markets. A rough comparison between the size of the contract-clearing optimization for an SC day-ahead market (DAM) and the size of a standard security-constrained unit commitment (SCUC) optimization for a US RTO/ISO-managed DAM is provided. Finally, the chapter briefly reviews additional desirable features of the Linked Swing-Contract Market Design.