The encyclopedia · Engineering & Operations · Technical decision · 2005–2012
MISO ran its power market on mixed-integer programming and unlocked billions in savings
MISO's OR-based energy markets saved the Midwest $2.1–3.0B from 2007–2010 and an expected $6.1–8.1B more by 2020; won the 2011 Edelman Award.
Midcontinent Independent System Operator (MISO)
the move
MISO operates one of the world's largest electricity markets across 13 Midwestern US states. For years, generators were scheduled through separate processes and prices were set outside the dispatch decision, leaving power plants and transmission lines used inefficiently.
MISO designed its energy markets around operations research: mixed-integer programming decides which power plants are on or off and at what output, and prices fall out of the same optimized dispatch. The energy-only market launched April 1, 2005, and the combined energy and ancillary services markets followed January 6, 2009.
The efficiency gains showed up as measured savings: MISO's annual value proposition studies put cumulative savings at $2.1–3.0 billion from 2007 through 2010, with an estimated $6.1–8.1 billion more through 2020. INFORMS gave MISO the 2011 Franz Edelman Award.
why it works
- Jointly optimizing commitment and output uses the existing fleet more efficiently than scheduling plants one by one.
- When prices emerge from the same optimization, market signals match physical operations.
- Better use of existing plants and lines defers expensive new infrastructure.
what transfers
Let the market-clearing algorithm do the thinking: when commitment and pricing are one optimization, efficiency and price signals improve together — the mechanism is the product.
what came after
MISO's markets have operated since 2005/2009 and delivered $2.1–3.0 billion in measured savings from 2007–2010, with billions more expected through 2020. The work won the 2011 Franz Edelman Award and became the standard reference for OR-designed wholesale electricity markets.
references
- MISO Wins INFORMS Edelman Award
- MISO Unlocks Billions in Savings Through the Application of Operations Research for Energy and Ancillary Services Markets (Interfaces abstract)
- 2011 Franz Edelman Award Book — MISO: Operations Research Ramps Up the Power Market in the Midwest
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