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Stepping Through Co-Optimisation: A Market Clearing Study of the NEMS

Stepping Through Co-Optimisation: A Market Clearing Study of the NEMS
Lu Feiyu, Senior Market Analyst
Original Publication Date: May 2004

The Market Clearing Engine (MCE) of the NEMS is a computer model that uses theoretically tight methods to determine optimal schedules that maximise social welfare while meeting system demand and satisfying the limits of generators, loads and the transmission system. The MCE solves the constraints, limits and requirements as a set of simultaneous linear equations to find an energy, regulation and reserves schedule that maximises the objective function of the greatest social welfare. It simultaneously determines prices for all constraints, which reflect the marginal cost of satisfying those constraints. As the MCE aims to find an optimal solution for energy, regulation and reserves as a whole, these products are always co-optimised in the MCE. Due to the complex nature of the NEMS model, the co-optimisation may not be easy to comprehend. This paper endeavours to explore the co-optimisation aspect of the MCE, in a step-by-step approach.