Our paper on the stability, economic efficiency, and incentive compatibility of electricity market dynamics [1] has been published in the IEEE Transactions on Automatic Control. Congrats Pengcheng and Yan!
![[doi]](https://mallada.ece.jhu.edu/wp-content/plugins/papercite/img/external.png){kind=small}
P. You, Y. Jiang, E. Yeung, D. Gayme, and E. Mallada, “On the Stability, Economic Efficiency and Incentive Compatibility of Electricity Market Dynamics,” IEEE Transactions on Automatic Control, vol. 70, iss. 10, pp. 6815-6830, 2025. [Bibtex] [Abstract] [Download PDF]
This paper focuses on the operation of an electricity market that accounts for participants that bid at a sub-minute timescale. To that end, we model the market-clearing process as a dynamical system, called market dynamics, which is temporally coupled with the grid frequency dynamics and is thus required to guarantee system-wide stability while meeting the system operational constraints. We characterize participants as price-takers who rationally update their bids to maximize their utility in response to real-time schedules of prices and dispatch. For two common bidding mechanisms, based on quantity and price, we identify a notion of alignment between participants’ behavior and planners’ goals that leads to a saddle-based design of the market that guarantees convergence to a point meeting all operational constraints. We further explore cases where this alignment property does not hold and observe that misaligned participants’ bidding can destabilize the closed-loop system. We thus design a regularized version of the market dynamics that recovers all the desirable stability and steady-state performance guarantees. Numerical tests validate our results on the IEEE 39-bus system.
@article{yjygm2025tac,
abstract = {This paper focuses on the operation of an electricity market that accounts for participants that bid at a sub-minute timescale. To that end, we model the market-clearing process as a dynamical system, called market dynamics, which is temporally coupled with the grid frequency dynamics and is thus required to guarantee system-wide stability while meeting the system operational constraints. We characterize participants as price-takers who rationally update their bids to maximize their utility in response to real-time schedules of prices and dispatch. For two common bidding mechanisms, based on quantity and price, we identify a notion of alignment between participants' behavior and planners' goals that leads to a saddle-based design of the market that guarantees convergence to a point meeting all operational constraints. We further explore cases where this alignment property does not hold and observe that misaligned participants' bidding can destabilize the closed-loop system. We thus design a regularized version of the market dynamics that recovers all the desirable stability and steady-state performance guarantees. Numerical tests validate our results on the IEEE 39-bus system.},
author = {You, Pengcheng and Jiang, Yan and Yeung, Enoch and Gayme, Dennice and Mallada, Enrique},
bdsk-url-3 = {https://mallada.ece.jhu.edu/pubs/2024-TAC-YJYGM.pdf},
doi = {10.1109/TAC.2025.3589447},
grants = {CPS-2136324, Global Centers-2330450},
journal = {IEEE Transactions on Automatic Control},
month = {10},
number = {10},
pages = {6815-6830},
record = {published Oct 2025, accepted Aug 2024, revised Dec 2023, submitted Dec 2021},
title = {On the Stability, Economic Efficiency and Incentive Compatibility of Electricity Market Dynamics},
url = {https://mallada.ece.jhu.edu/pubs/2025-TAC-YJYGM.pdf},
volume = {70},
year = {2025}
}