Impact of Reserve and Fixed Costs on the Day-Ahead Scheduling Problem in Greece’s Electricity Market

We sketch the main aspects of Greece’s electricity system from a market-based point of view. First, we provide data concerning the mix of generating units, the system load and the frequency-related ancillary services. Then, we formulate a simplified model of Greece’s Day-Ahead Scheduling (DAS) problem that constitutes the basis for our analysis. We examine various cases concerning the format of the objective function as well as the pricing and compensation schemes. An illustrative example is used to indicate the impact of reserve and fixed (start-up, shut-down, and minimum-load) costs on the resulting dispatching of units and on clearing prices, under the different cases. Our analysis aims at unveiling the impact of cost components other than energy offers on the DAS problem, and provide the grounds for future research on the design of the electricity market.Electricity Market, Day-Ahead Scheduling

A compensation-based pricing scheme in marketswith non-convexities

A compensation-based pricing scheme is a market clearing mechanism that may be applied when a uniform, linear pricing scheme cannot support equilibrium allocations in the auction markets. We analyze extensions of our previously proposed pricing scheme [14] to include various possible representations of bids that reflect some non-convex costs and constraints. We conclude with a discussion on directions for future research.auction design, electricity market, non-convex bids, minimum profit condition, unit commitment constraints

Impact of Reserve and Fixed Costs on the Day-Ahead Scheduling Problem in Greece’s Electricity Market

We sketch the main aspects of Greece’s electricity system from a market-based point of view. First, we provide data concerning the mix of generating units, the system load and the frequency-related ancillary services. Then, we formulate a simplified model of Greece’s Day-Ahead Scheduling (DAS) problem that constitutes the basis for our analysis. We examine various cases concerning the format of the objective function as well as the pricing and compensation schemes. An illustrative example is used to indicate the impact of reserve and fixed (start-up, shut-down, and minimum-load) costs on the resulting dispatching of units and on clearing prices, under the different cases. Our analysis aims at unveiling the impact of cost components other than energy offers on the DAS problem, and provide the grounds for future research on the design of the electricity market

An exact solution method for binary equilibrium problems with compensation and the power market uplift problem

We propose a novel method to find Nash equilibria in games with binary decision variables by including compensation payments and incentive-compatibility constraints from non-cooperative game theory directly into an optimization framework in lieu of using first order conditions of a linearization, or relaxation of integrality conditions. The reformulation offers a new approach to obtain and interpret dual variables to binary constraints using the benefit or loss from deviation rather than marginal relaxations. The method endogenizes the trade-off between overall (societal) efficiency and compensation payments necessary to align incentives of individual players. We provide existence results and conditions under which this problem can be solved as a mixed-binary linear program. We apply the solution approach to a stylized nodal power-market equilibrium problem with binary on-off decisions. This illustrative example shows that our approach yields an exact solution to the binary Nash game with compensation. We compare different implementations of actual market rules within our model, in particular constraints ensuring non-negative profits (no-loss rule) and restrictions on the compensation payments to non-dispatched generators. We discuss the resulting equilibria in terms of overall welfare, efficiency, and allocational equity

Optimal Pricing in Markets with Non-Convex Costs

We consider a market run by an operator who seeks to satisfy a given consumer demand for a commodity by purchasing the needed amount from a group of competing suppliers with non-convex cost functions. The operator knows the suppliers' cost functions and announces a price/payment function for each supplier, which determines the payment to that supplier for producing different quantities. Each supplier then makes an individual decision about how much to produce (and whether to participate at all), in order to maximize its own profit. The key question is how to design the price functions. This problem is relevant for many applications, including electricity markets. The main contribution of this paper is the introduction of a new pricing scheme, \name (\acr ) pricing, which is applicable to general non-convex costs, allows using general parametric price functions, and guarantees market clearing, revenue adequacy, and ecomonic efficiency while supporting comptitive euqilibrium. The name of this scheme stems from the fact that we directly impose all the equilibrium conditions as constraints in the optimization problem for finding the best allocations, as opposed to adjusting the prices later to make the allocations an equilibrium. While the optimization problem is, of course, non-convex, and non-convex problems are intractable in general, we present a tractable approximation algorithm for solving the proposed optimization problem. Our framework extends to the case of networked markets, which, to the best of our knowledge, has not been considered in previous work

An Exact Solution Method for Binary Equilibrium Problems with Compensation and the Power Market Uplift Problem

We propose a novel method to find Nash equilibria in games with binary decision variables by including compensation payments and incentive-compatibility constraints from non-cooperative game theory directly into an optimization framework in lieu of using first order conditions of a linearization, or relaxation of integrality conditions. The reformulation offers a new approach to obtain and interpret dual variables to binary constraints using the benefit or loss from deviation rather than marginal relaxations. The method endogenizes the trade-off between overall (societal) efficiency and compensation payments necessary to align incentives of individual players. We provide existence results and conditions under which this problem can be solved as a mixed-binary linear program. We apply the solution approach to a stylized nodal power-market equilibrium problem with binary on-off decisions. This illustrative example shows that our approach yields an exact solution to the binary Nash game with compensation. We compare different implementations of actual market rules within our model, in particular constraints ensuring non-negative profits (no-loss rule) and restrictions on the compensation payments to non-dispatched generators. We discuss the resulting equilibria in terms of overall welfare, efficiency, and allocational equity