Social Welfare Maximization for Hybrid Market

Electricity markets throughout the world continue to be opened to competitive forces. The underlying objective of introducing competition to these markets is to make them more efficient. It is a general concept of capitalism that if fair and equitable market structures are created, which give all market participants incentives to maximize their own individual welfare, then the market as a whole will behave in a manner which maximizes welfare for everyone. If this objective is to be achieved, the electricity industry needs new algorithms to help market participants behave in an efficient manner, helping them maximize their own welfare. It is imperative that these algorithms model the economics of the electricity market while maintaining the detail necessary to represent the underlying engineering requirements. This dissertation presents a new algorithm, which determines the social welfare of the system with best feasible bilateral transaction, while taking into account the full model of the electrical transmission system.