Integrating Iterative Bidding in Electricity Markets and Frequency Regulation

We study an electricity market consisting of an independent system operator (ISO) and a group of strategic generators. The ISO seeks to solve the optimal power dispatch problem and to regulate the frequency of the network. However, since generators do not share their cost functions, the ISO cannot solve the dispatch problem and instead engages the generators in an iterative bidding process. This consists of each generator submitting to the ISO a bid at which it is willing to provide power and receiving from the ISO a new power production setpoint calculated given the received bids and the network frequency. We analyze the stability of the interconnected system that results from the coupling between the iterative bidding scheme and the continuous-time swing dynamics of the power network and establish the convergence to the efficient Nash equilibrium and the optimal power dispatch.