Continuous Clearing
Overview
Most electricity markets operate using periodic market clearing.
Participants submit bids over a fixed trading interval.
The market waits until the gate closure time.
An optimisation determines the market outcome.
Prices are calculated.
Dispatch instructions are issued.
The process then repeats for the next trading period.
This architecture was developed for electricity systems containing relatively few large generators whose output changed slowly.
Modern electricity systems are fundamentally different.
Millions of distributed energy resources continuously connect, disconnect and change their operating state.
Electric vehicles begin charging.
Heat pumps respond to weather.
Batteries charge and discharge.
Solar generation changes as clouds pass overhead.
The state of the electricity system evolves continuously.
The market should therefore evolve continuously as well.
Periodic Markets Assume a Static World
Periodic clearing implicitly assumes that the state of the electricity system remains approximately constant throughout each market interval.
For conventional generation, this was often a reasonable approximation.
Large generators typically changed output gradually and could follow centrally issued dispatch instructions.
Distributed energy resources behave very differently.
The system may change thousands of times during a single settlement period.
Waiting until the next market interval delays the economic response.
Instead of preventing congestion, the market simply observes that congestion has already occurred.
Every Transaction Changes the System
One of the defining characteristics of FP-AMM is that every accepted transaction changes the operating state of the electricity system.
For example,
accepting an electric vehicle charging request:
- reduces available feeder capacity,
- changes power flows,
- changes voltage,
- changes future flexibility,
- changes battery state of charge,
- changes the remaining renewable surplus.
The next participant therefore encounters a different electricity system from the previous participant.
Prices should reflect this updated state.
Clearing One Transaction at a Time
Rather than waiting for an entire market interval to complete, FP-AMM processes transactions sequentially.
Each request follows the same cycle.
- A participant submits a request.
- The current state of the network is estimated.
- The pricing function is evaluated.
- Network feasibility is verified.
- If feasible, the transaction is accepted.
- The state estimate is updated.
- Prices are recalculated.
The updated prices then become the starting point for the next transaction.
The market therefore evolves continuously as new requests arrive.
Prices Continuously Adapt
Because the state of the electricity system changes after every accepted transaction, prices also evolve continuously.
Suppose renewable generation is abundant.
Initially,
buy prices are low.
Consumers begin charging electric vehicles.
As more charging requests are accepted,
available network capacity gradually decreases.
The pricing function responds by slowly increasing prices.
Eventually,
further charging becomes uneconomic before physical limits are reached.
The network naturally approaches an efficient operating point without requiring central intervention.
Continuous Feedback
The market forms a closed-loop feedback controller.
The sequence is simple.
Physical State
│
▼
State Estimation
│
▼
Pricing Function
│
▼
Participant Decisions
│
▼
Accepted Transactions
│
▼
Updated Physical State
Every transaction slightly changes the state of the electricity system.
That updated state produces new prices.
Those prices influence the next decision.
The process repeats indefinitely.
Rather than viewing the market as a sequence of isolated optimisations, FP-AMM views it as a continuously operating control system.
Rolling Planning Horizon
Continuous clearing does not mean that participants only consider the present moment.
Many decisions naturally extend into the future.
For example:
- an electric vehicle may require charging before 7:00 am,
- a battery may wish to reserve capacity for the evening peak,
- a heat pump may have several hours in which to heat a building,
- an industrial process may have flexible completion times.
Participants therefore submit requests describing their flexibility, rather than requesting energy at a single instant.
The AMM continuously updates these commitments using a rolling planning horizon.
Future commitments can therefore evolve as forecasts improve and network conditions change.
Planning becomes continuous rather than periodic.
Continuous Coordination
Traditional electricity markets separate planning and operation.
Wholesale markets determine schedules.
Balancing markets subsequently correct forecasting errors.
Constraint markets resolve network problems.
Ancillary service markets procure additional flexibility.
FP-AMM replaces these sequential markets with a single continuously operating coordination mechanism.
Every transaction simultaneously considers:
- energy availability,
- network capacity,
- participant flexibility,
- physical feasibility,
- current prices,
- future commitments.
Planning and operation therefore become part of the same optimisation process.
Advantages of Continuous Clearing
Continuous clearing provides several important advantages.
Faster Response
Prices adapt immediately as operating conditions change.
Improved Renewable Utilisation
Demand responds continuously to changing renewable availability.
Reduced Congestion
Prices begin changing before physical limits are exceeded.
Better Network Utilisation
Available capacity is used continuously rather than conservatively reserved between market intervals.
Natural Coordination
Millions of distributed devices can coordinate through continuously evolving prices without requiring centralised scheduling.
A Continuously Operating Market
The defining characteristic of FP-AMM is not simply that prices are updated frequently.
Rather, the market itself never stops operating.
Every accepted transaction changes the state of the electricity system.
That updated state changes prices.
Those prices influence the next participant.
The market therefore behaves as a continuously operating cyber-physical system in which economic decisions and physical network dynamics evolve together.
This continuous interaction between pricing, participant behaviour and network state forms the foundation of FP-AMM and enables the electricity market to coordinate millions of distributed energy resources while remaining physically feasible.