University of California Energy Institute

PWP-061

Power-Grid Decentralization

Bart McGuire (UCEI and Goldman School of Public Policy, UCB)

Most of the literature concerned with decentralized operations in power grids has focussed on partitioning systems initially into two main parts, the transmission system and the market of users (the "ISO" and the "PX"), and asking how the actions of these two subgroups can be properly coordinated.  While a number of studies have gone on to examine decentralized operations in the user market of producers and consumers, little attention has been given to how the operation of the transmission system itself might be decentralized.  In this paper we propose an organizational procedure for coordinating the actions of the managers of given subgrids of a larger system.  Non-invasive price-quantity dialogs are defined that, under fairly general circumstances, bring about perfect short-run coordination of the aggregate grid.