The Economics of Electricity Markets

11Efficient Operation of the Power System in the Very Short-Run

In practice, for reasons that will become clear shortly, all real power system operators spend a considerable amount of time and effort anticipating and protecting the power system against the next change in supply, demand or network conditions. But why is this necessary? And how does this fit with the concept of optimal dispatch discussed in previous chapters?

11.1 Introduction to Contingencies

In any electricity industry, no matter how it is organised, supply and demand must be kept in balance and any physical network constraints must be satisfied at all points in time.

In the real world, power system operators spend a considerable amount of time and energy ensuring that the power system remains in balance and that it will remain in balance following any contingency.

A contingency can be defined as any short-run change to the supply, demand or network conditions in the market, such as the following:

• Any change in the production conditions facing a generator so that it is unwilling or unable to produce according to its previously submitted marginal cost curve, such as the physical outage of all or part of the plant, a change in its input prices, or a change in the physical availability of a resource (such as solar or wind availability);
• Any change in consumption decisions so that a consumer is unwilling or unable to consume according to its previously submitted demand curve, such as the physical outage of a local ...