Abstract This paper proposes a constrained optimal power dispatch algorithm (COPD) for electricity and ancillary services auctions. The problem is decomposed into social welfare maximization subproblem which is solved by the mixed integer linear programming (MILP) and real power loss minimization subproblem which is solved by the quadratic programming (QP). The proposed COPD is tested on the modified IEEE 30 bus system with six generator companies (GenCos) bidding to sell the electricity and ancillary services. The social welfare of the proposed competitive electricity and ancillary services price scheme is higher than the competitive electricity price scheme and the constrained down payment (CDP) scheme adopted by the future Thailand power pool, thereby leading to a lower average electricity price. With the spot price including the marginal electricity price and marginal ancillary services prices, the correct price signal could be sent to all market participants. In addition, using the proposed scheme, the individual generator congestion gaming is not effective.
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