Modeling Power Systems as Complex Adaptive Systems

Physical analogs have shown considerable promise for understanding the behavior of complex adaptive systems, including macroeconomics, biological systems, social networks, and electric power markets. Many of today's most challenging technical and policy questions can be reduced to a distributed economic control problem. Indeed, economically based control of large-scale systems is founded on the conjecture that the price-based regulation (e.g., auctions, markets) results in an optimal allocation of resources and emergent optimal system control. This report explores the state-of-the-art physical analogs for understanding the behavior of some econophysical systems and deriving stable and robust control strategies for using them. We review and discuss applications of some analytic methods based on a thermodynamic metaphor, according to which the interplay between system entropy and conservation laws gives rise to intuitive and governing global properties of complex systems that cannot be otherwise understood. We apply these methods to the question of how power markets can be expected to behave under a variety of conditions.