Abstract
Abstract An important issue in deregulated power systems is the provision and pricing of ancillary services. In this paper, a pool-based market solution is proposed, where prices and volumes of energy and ancillary services are calculated simultaneously, recognizing the strong interdependence between these commodities. Generators and consumers prepare bids in the form of a statement of their own profit maximization problem. These problems are solved hour for hour by an independent Market Operator, using a Lagrange Relaxation based procedure. Market prices for energy and ancillary services are obtained as the dual values of their respective constraints. It is shown how market prices are obtained in a 10-unit example, and how demand-side bidding for ancillary services affects these prices.
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