A trilateral brokerage system for power transactions

In this paper, we design and analyse a brokerage system for buyers, sellers and intermediate utilities of electric power. Specifically, we mathematically characterize the determination of bids by buyers and sellers, the matching process of bids, and the selection of the transmission routes by the brokerage system. Moreover, we analyse the cost/benefit to intermediate utilities from the transmission of transacted power. The two key features differentiating this model from the extant literature on electric power transmission pricing and brokerage systems are: (1) multiple purchase and sale bids from potential buyers and sellers; and (2) the systematic determination of transmission routes by minimizing the total cost to intermediate utilities. The improvement in economic efficiency (measured in terms of cost savings) is demonstrated via a series of numerical examples.