Price-region bids in electricity markets

Current bid formats in pool-based electricity markets are ill-equipped to accommodate the broad range of non-conventional sources of flexibility, such as demand response and interconnected heating, natural gas and water infrastructure networks. To address this issue, this paper introduces the novel price-region bid format to be used in both forward electricity markets and financial right auctions. We show that price-region bids are able to accommodate a broad range of techno-economic characteristics, including complex spatial and temporal couplings, and facilitate market access to non-conventional flexibility providers. We then show that this new bid format is compatible with existing market structures, and satisfies desirable market properties under common assumptions. Three numerical studies are provided: two motivating examples based on a district heating utility and a cascaded hydro power plant, and a case study based on an integrated power and heat system. These studies illustrate the inability of existing bid formats to accommodate flexible resources, and show how price-region bids overcome this shortcoming.