IEEE Power & Energy Magazine - May/June 2022 - 86

markets for flexibility
it don't mean a thing if it ain't got that swing
T
86
THIS ISSUE'S " BOOK REVIEW "
column discusses A New Swing-Contract
Design for Wholesale Power
Markets, written by Leigh Tesfatsion.
This reviewer writes, " this book is
timely and topical, given the increasing
amount of variable and distributed
energy sources penetrating markets
worldwide. "
economic dispatch mechanisms. However,
the result is higher flexibility for
providing supply-demand balance,
given the more flexible form of swing
contracts relative to current markets.
The cleared contracts can be reA
New Swing-Contract
Design for Wholesale
Power Markets
By Leigh Tesfatsion
Leigh Tesfatsion's latest book proposes a
new wholesale electricity market design
paradigm, with a focus on North America,
for centrally managed electricity
markets that are based on the novel concept
of " swing contracts. " Tesfatsion, a
professor at Iowa State University, has
been working on electricity market design
and agent-based computational
economics for many years. Her extensive
academic, research, and industry
experiences, as well as her training in
both economics and mathematics, make
her highly qualified to provide fresh
thinking in this important area.
The book proposes the adoption
of swing contracts between the system
operator and relevant resources
to provide flexibility ( " swing " ). This
flexibility is represented in the form
of future availability of dispatchable
power paths ( " reserve " ) with prespeciDigital
Object Identifier 10.1109/MPE.2022.3150811
Date of current version: 19 April 2022
ieee power & energy magazine
fied physical attributes (e.g., location,
exercise time, ramp rate limits, and
minimum/maximum production levels)
and economic attributes (for pricing
purposes). Dispatchable resources
offer such power paths into multiple,
centrally managed
markets linked across
different timescales
(from years ahead, for
adequacy purposes, to
minutes ahead, for real-time
balancing). The
system operator clears
different markets with
a process similar to and
consistent with current
security-constrained
unit commitment and
The book
contains rigorous
mathematical
descriptions of
the proposed
mechanism and
implementations.
munerated based on a two-component
model, namely, an offer price (to recover
ex ante avoidable fixed costs to ensure
the availability of relevant power paths
when required) and a performance
payment (to recover ex post and after
actual performance verification of operational
costs to deliver relevant power
paths). This could more readily ensure
market players' recovery of their different
types of costs, from investment
(e.g., instead of, but aligned with capacity
mechanisms and capacity markets)
to operational, quasi-fixed costs (e.g.,
instead of make-whole payments for
binary-commitment cost recovery).
The book is timely and topical, given
the increasing amount of variable and
distributed energy sources penetrating
markets worldwide. The proposed concepts
and paradigm are
extremely refreshing
and novel. At the same
time, they build on the
status quo of current
electricity markets in
the United States. This
presents clear opportunities
and pathways
for a smooth transition
toward centrally managed
electricity markets
with high penetration
may/june 2022
book review
IEEE Power & Energy Magazine - May/June 2022

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