1932
0

Annual Review of Control, Robotics, and Autonomous Systems

Volume 8, 2025

Control Engineer Roles in the Next Power Market Transition

  • Hala Ballouz1, Joel Mathias2, Sean Meyn3, Robert Moye4 and Joseph Warrington5
  • 1Electric Power Engineers, Austin, Texas, USA 2Midcontinent Independent System Operator (MISO), Carmel, Indiana, USA 3Department of Electrical and Computer Engineering, University of Florida, Gainesville, Florida, USA; email: [email protected] 4Tyr Energy, Overland Park, Kansas, USA 5AstraZeneca, Cambridge, United Kingdom
  • Vol. 8:235-265 (Volume publication date May 2025)
  • First published as a Review in Advance on January 02, 2025
  • Copyright © 2025 by the author(s).
    This work is licensed under a Creative Commons Attribution 4.0 International License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. See credit lines of images or other third-party material in this article for license information.

Abstract

This survey of power operations and power markets is a collaboration between members of academia and industry. It describes the thinking behind rules in organized electricity markets, which are rooted in the theory of efficient markets, and why this theory is ill suited to address the range of challenges in real-world power systems operations. The mismatch between market theory and reality includes a lack of consideration of fixed costs and a lack of understanding of value to the consumers. Moreover, the efficient equilibrium is the solution to a risk-neutral, single-objective optimal control problem. Every control engineer knows that such solutions are rarely the final answer to a practical control problem. It is hoped that this work will inspire the control community to collaborate with industry in the design of the next generation of power markets.

Keyword(s): demand dispatch, demand response, dynamic competitive equilibrium, energy policy, power grid
Loading

Article metrics loading...

/content/journals/10.1146/annurev-control-030323-023057
2025-05-05
2025-06-15
Loading full text...

Full text loading...

/deliver/fulltext/control/8/1/annurev-control-030323-023057.html?itemId=/content/journals/10.1146/annurev-control-030323-023057&mimeType=html&fmt=ahah

Literature Cited

  1. 1.
    Hansen LP, Sargent TJ, Turmuhambetova G, Williams N. 2006.. Robust control and model misspecification. . J. Econ. Theory 128:(1):45–90
     [Crossref] [Google Scholar]
  2. 2.
    Hansen LP, Scheinkman JA. 2009.. Long-term risk: an operator approach. . Econometrica 77:(1):177–234
     [Crossref] [Google Scholar]
  3. 3.
    Wang G, Kowli A, Negrete-Pincetic M, Shafieepoorfard E, Meyn S. 2011.. A control theorist's perspective on dynamic competitive equilibria in electricity markets. . IFAC Proc. 44:(1):4933–38
     [Crossref] [Google Scholar]
  4. 4.
    Qin J, Rajagopal R, Varaiya P. 2018.. Flexible market for smart grid: coordinated trading of contingent contracts. . IEEE Trans. Control Netw. Syst. 5:(4):1657–67
     [Crossref] [Google Scholar]
  5. 5.
    Tesfatsion L. 2020.. A New Swing-Contract Design for Wholesale Power Markets. Hoboken, NJ:: Wiley & Sons
     [Google Scholar]
  6. 6.
    Schweppe FC. 1978.. Power systems “2000”: hierarchical control strategies. . IEEE Spectrum 15:(7):42–47
     [Crossref] [Google Scholar]
  7. 7.
    Meyn S, Samad T, Hiskens I, Stoustrup J, eds. 2018.. Energy Markets and Responsive Grids: Modeling, Control, and Optimization. New York:: Springer
     [Google Scholar]
  8. 8.
    Chertkov M, Chernyak VY. 2018.. Ensemble control of cycling energy loads: Markov decision approach. . In Energy Markets and Responsive Grids: Modeling, Control, and Optimization, ed. S Meyn, T Samad, I Hiskens, J Stoustrup , pp. 363–82. New York:: Springer
     [Google Scholar]
  9. 9.
    Almassalkhi M, Espinosa LD, Hines PDH, Frolik J, Paudyal S, Amini M. 2018.. Asynchronous coordination of distributed energy resources with packetized energy management. . In Energy Markets and Responsive Grids: Modeling, Control, and Optimization, ed. S Meyn, T Samad, I Hiskens, J Stoustrup , pp. 333–61. New York:: Springer
     [Google Scholar]
  10. 10.
    Chen Y, Hashmi MU, Mathias J, Bušić A, Meyn S. 2018.. Distributed control design for balancing the grid using flexible loads. . In Energy Markets and Responsive Grids: Modeling, Control, and Optimization, ed. S Meyn, T Samad, I Hiskens, J Stoustrup , pp. 383–411. New York:: Springer
     [Google Scholar]
  11. 11.
    Moye R, Meyn S. 2018.. Redesign of U.S. electricity capacity markets. . In Energy Markets and Responsive Grids: Modeling, Control, and Optimization, ed. S Meyn, T Samad, I Hiskens, J Stoustrup , pp. 73–103. New York:: Springer
     [Google Scholar]
  12. 12.
    Mathieu J. 2012.. Modeling, analysis, and control of demand response resources. PhD Thesis, Univ. Calif., Berkeley:
     [Google Scholar]
  13. 13.
    Lin Y, Barooah P, Meyn S, Middelkoop T. 2015.. Experimental evaluation of frequency regulation from commercial building HVAC systems. . IEEE Trans. Smart Grid 6:(2):776–83
     [Crossref] [Google Scholar]
  14. 14.
    Chen Y. 2016.. Markovian demand dispatch design for virtual energy storage to support renewable energy integration. PhD Thesis, Univ. Fla., Gainesville:
     [Google Scholar]
  15. 15.
    Cammardella N. 2021.. Creating virtual energy storage through optimal allocation and control of flexible power consumption. PhD Thesis, Univ. Fla., Gainesville:
     [Google Scholar]
  16. 16.
    Mathias J. 2022.. Balancing the power grid with distributed control of flexible loads. PhD Thesis, Univ. Fla., Gainesville:
     [Google Scholar]
  17. 17.
    Benenati E, Colombino M, Dall'Anese E. 2019.. A tractable formulation for multi-period linearized optimal power flow in presence of thermostatically controlled loads. . In 2019 IEEE 58th Conference on Decision and Control, pp. 4189–94. Piscataway, NJ:: IEEE
     [Google Scholar]
  18. 18.
    Albadi MH, El-Saadany EF. 2008.. A summary of demand response in electricity markets. . Electr. Power Syst. Res. 78:(11):1989–96
     [Crossref] [Google Scholar]
  19. 19.
    GridWise Archit. Counc. 2013.. GridWise transactive energy framework version 1.1. Tech. Rep. PNNL-22946, Pac. Northwest Natl. Lab. , Richland, WA:
     [Google Scholar]
  20. 20.
    Bade G. 2017.. Zibelman exit interview: how the New York REV is paving the way for transactive energy. . Utility Dive, Feb. 1. https://www.utilitydive.com/news/zibelman-exit-interview-how-the-new-york-rev-is-paving-the-way-for-transac/435252
  21. 21.
    Chassin DP, Hammerstrom DJ, DeSteese JG. 2008.. The Pacific Northwest demand response market demonstration. . In 2008 IEEE Power and Energy Society General Meeting: Conversion and Delivery of Electrical Energy in the 21st Century. Piscataway, NJ:: IEEE. https://doi.org/10.1109/PES.2008.4596723
    [Google Scholar]
  22. 22.
    US Dep. Energy. 2006.. Benefits of demand response in electricity markets and recommendations for achieving them: a report to the United States Congress pursuant to section 1252 of the Energy Policy Act of 2005. Tech. Rep., US Dep. Energy, Washington, DC:
     [Google Scholar]
  23. 23.
    Hogan WW. 2013.. Electricity scarcity pricing through operating reserves. . Econ. Energy Environ. Policy 2:(2):65–86
     [Crossref] [Google Scholar]
  24. 24.
    Borenstein S. 2005.. Time-varying retail electricity prices: theory and practice. . In Electricity Deregulation: Choices and Challenges, ed. JM Griffin, SL Puller , pp. 317–57. Chicago:: Univ. Chicago Press
     [Google Scholar]
  25. 25.
    Luetolf P, Scherer M, Megel O, Geidl M, Vrettos E. 2018.. Rebound effects of demand-response management for frequency restoration. . In 2018 IEEE International Energy Conference. Piscataway, NJ:: IEEE. https://doi.org/10.1109/ENERGYCON.2018.8398849
     [Google Scholar]
  26. 26.
    Byrne J, Mun YM. 2003.. Rethinking reform in the electricity sector: power liberalization or energy transformation. . In Electricity Reform: Social and Environmental Challenges, ed. N Wamunkonya , pp. 48–76. Roskilde, Den:.: UNEP-RISØ Cent.
     [Google Scholar]
  27. 27.
    Alexander BR. 2010.. Dynamic pricing? Not so fast! A residential consumer perspective. . Electr. J. 23:(6):39–49
     [Crossref] [Google Scholar]
  28. 28.
    Budryk Z. 2021.. Texas sues power provider Griddy, alleging deceptive advertising and marketing. . The Hill, Mar. 1. https://thehill.com/policy/energy-environment/540967-texas-sues-power-provider-griddy-over-winter-storm-rates
    [Google Scholar]
  29. 29.
    Frey BS, Oberholzer-Gee F. 1997.. The cost of price incentives: an empirical analysis of motivation crowding-out. . Am. Econ. Rev. 87:(4):746–55
     [Google Scholar]
  30. 30.
    Sovacool BK. 2014.. Diversity: Energy studies need social science. . Nature 511:(7511):529–30
     [Crossref] [Google Scholar]
  31. 31.
    He X, Keyaerts N, Azevedo I, Meeus L, Hancher L, Glachant JM. 2013.. How to engage consumers in demand response: a contract perspective. . Util. Policy 27::108–22
     [Crossref] [Google Scholar]
  32. 32.
    Xu X, Chen CF, Zhu X, Hu Q. 2018.. Promoting acceptance of direct load control programs in the United States: financial incentive versus control option. . Energy 147::1278–87
     [Crossref] [Google Scholar]
  33. 33.
    Parrish B, Heptonstall P, Gross R, Sovacool BK. 2020.. A systematic review of motivations, enablers and barriers for consumer engagement with residential demand response. . Energy Policy 138::111221
     [Crossref] [Google Scholar]
  34. 34.
    Hirschhorn P, Wilkison O, Gilmore J, Brijs T, Brognaux C. 2022.. Is electricity pricing running out of gas? Tech. Rep., Boston Consult. Group, Boston:
     [Google Scholar]
  35. 35.
    Keppler JH, Quemin S, Saguan M. 2022.. Why the sustainable provision of low-carbon electricity needs hybrid markets. . Energy Policy 171::113273
     [Crossref] [Google Scholar]
  36. 36.
    Mehrtash M, Hobbs BF, Ela E. 2023.. Reserve and energy scarcity pricing in United States power markets: a comparative review of principles and practices. . Renew. Sustain. Energy Rev. 183::113465
     [Crossref] [Google Scholar]
  37. 37.
    Fell MJ, Shipworth D, Huebner GM, Elwell CA. 2015.. Public acceptability of domestic demand-side response in Great Britain: the role of automation and direct load control. . Energy Res. Soc. Sci. 9::72–84
     [Crossref] [Google Scholar]
  38. 38.
    Joskow PL. 2022.. From hierarchies to markets and partially back again in electricity: responding to decarbonization and security of supply goals. . J. Inst. Econ. 18:(2):313–29
     [Google Scholar]
  39. 39.
    Frew BA, Clark K, Bloom AP, Milligan M. 2017.. Marginal cost pricing in a world without perfect competition: implications for electricity markets with high shares of low marginal cost resources. Tech. Rep. NREL/TP-6A20-69076, Natl. Renew. Energy Lab., Golden, CO:
     [Google Scholar]
  40. 40.
    Lo H, Blumsack S, Hines P, Meyn S. 2019.. Electricity rates for the zero marginal cost grid. . Electr. J. 32:(3):39–43
     [Crossref] [Google Scholar]
  41. 41.
    Coase R. 1946.. The marginal cost controversy. . Econometrica 13:(51):169–82
     [Google Scholar]
  42. 42.
    Frischmann BM, Hogendorn C. 2015.. Retrospectives: the marginal cost controversy. . J. Econ. Perspect. 29:(1):193–206
     [Crossref] [Google Scholar]
  43. 43.
    Spence DB. 2018.. Naïve electricity markets. . In Energy Markets and Responsive Grids: Modeling, Control, and Optimization, ed. S Meyn, T Samad, I Hiskens, J Stoustrup , pp. 29–57. New York:: Springer
     [Google Scholar]
  44. 44.
    Houst. Chron. 2011.. Rolling blunder statewide blackouts raise the question: Who really runs the Lone Star power grid?. Houston Chronicle, Feb. 13. https://www.chron.com/opinion/editorials/article/Blackouts-raise-question-Who-really-runs-the-1689025.php
    [Google Scholar]
  45. 45.
    Surendran R, Hogan W, Hui H, Yu C. 2016.. Scarcity pricing in ERCOT. Presentation at the Federal Energy Regulatory Committee Technical Conference on Increasing Real-Time and Day-Ahead Market Efficiency Through Improved Software, Washington, DC:, June 27–29
    [Google Scholar]
  46. 46.
    Newell S, Spees K, Pfeifenberger J, Mudge R, DeLucia M, Carlton R. 2012.. ERCOT investment incentives and resource adequacy. Tech. Rep., Brattle Group, Cambridge, MA:
     [Google Scholar]
  47. 47.
    O'Shea M, Goel R, Miller R. 2021.. Breaking down the Texas winter blackouts: What went wrong?. Wood Mackenzie, Feb. 19. https://www.woodmac.com/news/editorial/breaking-down-the-texas-winter-blackouts/full-report
    [Google Scholar]
  48. 48.
    Satija N, Gregg A. 2021.. Ten years ago, 241 Texas power plants couldn't take the cold. Dozens of them failed again this year. . Washington Post, Mar. 6. https://www.washingtonpost.com/nation/2021/03/06/texas-power-plants
    [Google Scholar]
  49. 49.
    Baye MR, Prince JT. 2013.. Managerial Economics and Business Strategy. New York:: McGraw-Hill. , 8th ed..
     [Google Scholar]
  50. 50.
    US Energy Inf. Adm. 2024.. US electricity profile 2024. . US Energy Information Administration, Nov. 6. https://www.eia.gov/electricity/state
    [Google Scholar]
  51. 51.
    N. Am. Electr. Reliab. Corp. 2024.. 2024 summer reliability assessment. Rep., N. Am. Electr. Reliab. Corp., Atlanta:. https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_SRA_2024.pdf
    [Google Scholar]
  52. 52.
    Ballousz H, Mathias J, Meyn S, Moye R, Warrington J. 2021.. Reliable power grid: long overdue alternatives to surge pricing. . arXiv:2103.06355 [math.OC]
  53. 53.
    Ballouz H, Mathias J, Meyn S, Moye R, Warrington J. 2021.. Addressing misconceptions on the performance of the energy market in Texas. . Utility Dive, Apr. 15. https://www.utilitydive.com/news/addressing-misconceptions-on-the-performance-of-the-energy-market-in-texas/598436
    [Google Scholar]
  54. 54.
    Moye RW. 2021.. Resource investments in organized markets: a case for central planning. PhD Thesis, Univ. Fla., Gainesville:
     [Google Scholar]
  55. 55.
    Cho IK, Meyn SP. 2010.. Efficiency and marginal cost pricing in dynamic competitive markets with friction. . Theor. Econ. 5:(2):215–39
     [Crossref] [Google Scholar]
  56. 56.
    Luenberger D. 2003.. Linear and Nonlinear Programming. Boston:: Kluwer Acad. , 2nd ed..
     [Google Scholar]
  57. 57.
    Mathias J, Meyn S, Moye R, Warrington J. 2023.. State-space collapse in resource allocation for demand dispatch and its implications for distributed control design. . IEEE Trans. Autom. Control 68:(12):7616–28
     [Crossref] [Google Scholar]
  58. 58.
    Gibbens R, Kelly F. 1999.. Resource pricing and the evolution of congestion control. . Automatica 35:(12):1969–85
     [Crossref] [Google Scholar]
  59. 59.
    Monit. Anal. 2023.. Ancillary services. . In State of the Market Report for PJM, Vol. 2: Detailed Analysis , pp. 531–614. Eagleville, PA:: Monit. Anal.
     [Google Scholar]
  60. 60.
    Katz J, Denholm P, Pless J. 2015.. Wind and solar on the power grid: myths and misperceptions, greening the grid. Tech. Rep. NREL/FS-6A20-63045 , Natl. Renew. Energy Lab., Golden, CO:
     [Google Scholar]
  61. 61.
    Diakopoulos N. 2015.. How Uber surge pricing really works. . Washington Post, Apr. 17. https://www.washingtonpost.com/news/wonk/wp/2015/04/17/how-uber-surge-pricing-really-works
    [Google Scholar]
  62. 62.
    Kirchner L, Mattu S. 2015.. Uber's surge pricing may not lead to a surge in drivers. . ProPublica, Oct. 19. https://www.propublica.org/article/uber-surge-pricing-may-not-lead-to-a-surge-in-drivers
    [Google Scholar]
  63. 63.
    Roozbehani M, Dahleh MA, Mitter SK. 2012.. Volatility of power grids under real-time pricing. . IEEE Trans. Power Syst. 27:(4):1926–40
     [Crossref] [Google Scholar]
  64. 64.
    Seel J, Mills AD, Wiser R. 2018.. Impacts of high variable renewable energy futures on wholesale electricity prices, and on electric-sector decision making. Tech. Rep. LBNL-2001163, Lawrence Berkeley Natl. Lab., Berkeley, CA:
     [Google Scholar]
  65. 65.
    Park RE, Mitchell BM. 1987.. Optimal peak-load pricing for local telephone calls. Tech. Rep. R-3404-1-RC, RAND Corp., Santa Monica, CA:
     [Google Scholar]
  66. 66.
    Hao H, Sanandaji BM, Poolla K, Vincent TL. 2015.. Aggregate flexibility of thermostatically controlled loads. . IEEE Trans. Power Syst. 30:(1):189–98
     [Crossref] [Google Scholar]
  67. 67.
    Meyn S, Barooah P, Bušić A, Chen Y, Ehren J. 2015.. Ancillary service to the grid using intelligent deferrable loads. . IEEE Trans. Autom. Control 60:(11):2847–62
     [Crossref] [Google Scholar]
  68. 68.
    Coase R. 1960.. The problem of social cost. . J. Law Econ. 3::1–44
     [Crossref] [Google Scholar]
  69. 69.
    Coase R. 2012.. The Firm, the Market, and the Law. Chicago:: Univ. Chicago Press
     [Google Scholar]
  70. 70.
    Zhou JS. 2023.. The lighthouse of economics. . Harvard Crimson, Oct. 4. https://www.thecrimson.com/column/homo-economicus/article/2013/10/4/lighthouse-economics-coase
    [Google Scholar]
  71. 71.
    Williamson O. 2010.. Transaction cost economics: the natural progression. . Am. Econ. Rev. 100:(3):673–90
     [Crossref] [Google Scholar]
  72. 72.
    Gold R. 2021.. Texas overcharged $16 billion for power during freeze, monitor says. . Wall Street Journal, Mar. 4. https://www.wsj.com/articles/texas-overcharged-16-billion-for-power-during-freeze-monitor-says-11614894714
    [Google Scholar]
  73. 73.
    Zakeri G. 2021.. Texas blackout panel discussion. . YouTube. https://www.youtube.com/watch?v=Wz3172SIAfI
    [Google Scholar]
  74. 74.
    Kawamura E. 2005.. Competitive equilibrium with unawareness in economies with production. . J. Econ. Theory 121:(2):167–91
     [Crossref] [Google Scholar]
  75. 75.
    Orr JS, Dennehy CJ. 2017.. Analysis of the X-15 flight 3-65-97 divergent limit-cycle oscillation. . J. Aircr. 54:(1):135–48
     [Crossref] [Google Scholar]
  76. 76.
    Lu F, Mathias J, Meyn S, Kalsi K. 2022.. Model-free characterizations of the Hamilton-Jacobi-Bellman equation and convex Q-learning in continuous time. . arXiv:2210.08131 [math.OC]
  77. 77.
    Lu X, Li K, Xu H, Wang F, Zhou Z, Zhang Y. 2020.. Fundamentals and business model for resource aggregator of demand response in electricity markets. . Energy 204::117885
     [Crossref] [Google Scholar]
/content/journals/10.1146/annurev-control-030323-023057
Loading
Control Engineer Roles in the Next Power Market Transition
Annual Review of Control, Robotics, and Autonomous Systems 8, 235 (2025); https://doi.org/10.1146/annurev-control-030323-023057
/content/journals/10.1146/annurev-control-030323-023057
/content/journals/10.1146/annurev-control-030323-023057
Loading

Data & Media loading...

Most Cited Most Cited RSS feed

This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error