A Dynamic Market Mechanism for Markets with Shiftable Demand Response

Abstract: In this paper, we propose a dynamic market mechanism that converges to the desired market equilibrium. Both locational marginal prices and the schedules for generation and consumption are determined through a negotiation process between the key market players. In addition to incorporating renewables, this mechanism accommodates both consumers with a shiftable Demand Response and an adjustable Demand Response. The overall market mechanism is evaluated in a Day Ahead Market and is shown in a numerical example to result in a reduction of the cost of electricity for the consumer, as well as an increase in the Social Welfare