Demand-side reserve offers in joint energy/reserve electricity markets

Abstract
We propose a market model that includes demand-side reserve offers and where energy and reserve are jointly dispatched. Generators and consumers can submit offers and bids on five distinct products-energy, upspinning reserve, downspinning reserve, and two kinds of standby reserve. The resources are scheduled and dispatched in a joint auction through a mixed-integer optimization program. The extra scheduling flexibility introduced by demand-side reserve offers can lead to significant gains in economic efficiency. Thus, the results suggest that not only do the consumers increase their profits but, in addition, the market power of the generators is reduced.

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