Incorporating interface bids in the economic dispatch for multi-area power systems

The problem of incorporating interface bids by market participants in the coordinated economic dispatch for multi-area power systems is considered. Interface bids facilitate power flow between different areas whereas different system operators do not trade directly. The model of interface bids in coordinated economic dispatch is presented. Interface bids are cleared prior to real time markets, with the objective to minimize the sum of costs of internal and interface bids, and settled together with internal bids by real time locational marginal prices. Properties of individual optimality and revenue adequacy are established. Numerical experiments show the advantages of the proposed method over existing benchmarks.