Future Electricity Market Design to Ensure Resilient and Efficient Operations

There is considerable literature on metrics for physical resilience of power systems based on factors such as time to recover from a disturbance and the probability of a disturbance overwhelming operating reserves. However, on the resilient design of markets there is not much to be found. The key objective of this paper is to extend resilience metrics to market mechanisms including financial and policy shocks. We will do this by examining the characteristics of market designs that support the different physical metrics of resilience and our analysis of shocks such as financial failure of one or more major market participants or inadvertent or unexpected outcomes of policy such as excessive out of market support for a particular technology without adequate consideration of (say) business as usual market pricing. This paper explores the key components of a resilient market design, what are the characteristics needed to be able to handle rare events. It discusses the technology integration in different areas like production, transmission and distribution. Further, resilience measures are described and subsequently a table is constructed that lists the market design characteristics that support resilience and describes the effects they have. Some real-world examples are described where in these specific cases the design of the market explicitly helped to mitigate serious events.