Transmission-Constrained Inverse Residual Demand Jacobian Matrix In Electricity Markets

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Executive Summary

A generation firm in an electricity market may own multiple generators located at multiple locations. This paper generalizes the concept of transmission-constrained residual demand from a single generator's perspective to that of a generation firm. The authors calculate the derivative of a generation firm's inverse residual demand function, i.e., the Jacobian matrix, based on a multi-parameter sensitivity analysis of the optimal power flow solution, and characterize some of its properties. This Jacobian matrix provides valuable information, such as in characterizing a generation firm's profit maximizing strategy.

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