IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v317y2024i1p25-42.html

A computationally efficient approach to optimizing offers in centrally committed electricity markets

Author

Listed:
  • Jiang, Yuzhou
  • Sioshansi, Ramteen

Abstract

We study the incentive properties of the two primary approaches to incorporating unit-commitment decisions in wholesale electricity markets. One approach is centralized unit commitment, wherein generating firms provide complex multi-part offers that specify their non-convex fixed and variable operating costs. The market operator uses these offers to co-optimize unit-commitment and economic-dispatch decisions. The second approach is self-commitment, whereby firms determine unit-commitment decisions for their generating units individually and submit simple offers for the provision of energy. Operators of self-committed markets determine generator dispatch based on the merit order of the simple offers.

Suggested Citation

  • Jiang, Yuzhou & Sioshansi, Ramteen, 2024. "A computationally efficient approach to optimizing offers in centrally committed electricity markets," European Journal of Operational Research, Elsevier, vol. 317(1), pages 25-42.
    • Handle: RePEc:eee:ejores:v:317:y:2024:i:1:p:25-42
    DOI: 10.1016/j.ejor.2024.01.040
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221724000808
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2024.01.040?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. repec:aen:journl:ej40-6-sioshansi is not listed on IDEAS
    2. Johnson, Raymond B. & Oren, Shmuel S. & Svoboda, Alva J., 1997. "Equity and efficiency of unit commitment in competitive electricity markets," Utilities Policy, Elsevier, vol. 6(1), pages 9-19, March.
    3. repec:aen:journl:1999v20-04-a04 is not listed on IDEAS
    4. repec:aen:journl:ej33-4-05 is not listed on IDEAS
    5. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    6. Ramteen Sioshansi & Emma Nicholson, 2011. "Towards equilibrium offers in unit commitment auctions with nonconvex costs," Journal of Regulatory Economics, Springer, vol. 40(1), pages 41-61, August.
    7. Mays, Jacob & Morton, David P. & O’Neill, Richard P., 2021. "Investment effects of pricing schemes for non-convex markets," European Journal of Operational Research, Elsevier, vol. 289(2), pages 712-726.
    8. Gabriel, Steven A. & Leuthold, Florian U., 2010. "Solving discretely-constrained MPEC problems with applications in electric power markets," Energy Economics, Elsevier, vol. 32(1), pages 3-14, January.
    9. Herbert E. Scarf, 1990. "Mathematical Programming and Economic Theory," Operations Research, INFORMS, vol. 38(3), pages 377-385, June.
    10. John A. Muckstadt & Sherri A. Koenig, 1977. "An Application of Lagrangian Relaxation to Scheduling in Power-Generation Systems," Operations Research, INFORMS, vol. 25(3), pages 387-403, June.
    11. Huppmann, Daniel & Siddiqui, Sauleh, 2018. "An exact solution method for binary equilibrium problems with compensation and the power market uplift problem," European Journal of Operational Research, Elsevier, vol. 266(2), pages 622-638.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:aen:journl:ej33-4-05 is not listed on IDEAS
    2. Ramteen Sioshansif & Ashlin Tignor, 2012. "Do Centrally Committed Electricity Markets Provide Useful Price Signals?," The Energy Journal, , vol. 33(4), pages 96-118, October.
    3. Vadim Borokhov, 2022. "Utilizing the redundant constraints for the uplift payment elimination," Operational Research, Springer, vol. 22(2), pages 1377-1402, April.
    4. Trüby, Johannes, 2013. "Strategic behaviour in international metallurgical coal markets," Energy Economics, Elsevier, vol. 36(C), pages 147-157.
    5. Holmberg, Pär & Tangerås, Thomas & Ahlqvist, Victor, 2018. "Central- versus Self-Dispatch in Electricity Markets," Working Paper Series 1257, Research Institute of Industrial Economics, revised 27 Mar 2019.
    6. George Liberopoulos & Panagiotis Andrianesis, 2016. "Critical Review of Pricing Schemes in Markets with Non-Convex Costs," Operations Research, INFORMS, vol. 64(1), pages 17-31, February.
    7. Neetzow, Paul & Mendelevitch, Roman & Siddiqui, Sauleh, 2019. "Modeling coordination between renewables and grid: Policies to mitigate distribution grid constraints using residential PV-battery systems," Energy Policy, Elsevier, vol. 132(C), pages 1017-1033.
    8. Mays, Jacob, 2024. "Sequential pricing of electricity," Energy Economics, Elsevier, vol. 137(C).
    9. Joseph E. Duggan Jr. & Ramteen Sioshansi, 2019. "Another Step Towards Equilibrium Offers in Unit Commitment Auctions with Nonconvex Costs: Multi-Firm Oligopolies," The Energy Journal, , vol. 40(6), pages 249-282, November.
    10. Eldridge, B. & O Neill, R. & Hobbs, B., 2018. "Pricing in Day-Ahead Electricity Markets with Near-Optimal Unit Commitment," Cambridge Working Papers in Economics 1872, Faculty of Economics, University of Cambridge.
    11. Dimitri J. Papageorgiou & Francisco Trespalacios & Stuart Harwood, 2021. "A Note on Solving Discretely-Constrained Nash-Cournot Games via Complementarity," Networks and Spatial Economics, Springer, vol. 21(2), pages 325-330, June.
    12. O'Neill, Richard P. & Sotkiewicz, Paul M. & Hobbs, Benjamin F. & Rothkopf, Michael H. & Stewart, William R., 2005. "Efficient market-clearing prices in markets with nonconvexities," European Journal of Operational Research, Elsevier, vol. 164(1), pages 269-285, July.
    13. Thai Doan Chuong & Xinghuo Yu & Andrew Eberhard & Chaojie Li & Chen Liu, 2024. "Hierarchy relaxations for robust equilibrium constrained polynomial problems and applications to electric vehicle charging scheduling," Journal of Global Optimization, Springer, vol. 90(3), pages 781-811, November.
    14. Donna, Javier D. & Pereira, Pedro & Trindade, Andre & Yoshida, Renan C., 2020. "Direct-to-Consumer Sales by Manufacturers and Bargaining," MPRA Paper 105773, University Library of Munich, Germany.
    15. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 2, chapter 15, pages 1073-1225, Elsevier.
    16. Simon P. Anderson & Régis Renault, 2011. "Price Discrimination," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 22, Edward Elgar Publishing.
    17. Leonard J. Mirman & Egas M. Salgueiro & Marc Santugini, 2013. "Integrating Real and Financial Decisions of the Firm," Cahiers de recherche 1333, CIRPEE.
    18. Kuosmanen, Natalia & Valmari, Nelli, 2023. "Renewal of Companies Through Product Switching," ETLA Working Papers 104, The Research Institute of the Finnish Economy.
    19. Alexander, Corinne E., 2002. "The Role Of Seed Company Supplied Information In Farmers' Decisions," 2002 Annual meeting, July 28-31, Long Beach, CA 19617, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Kathryn E. Spier, 2003. "“Tied to the Mast”: Most-Favored-Nation Clauses in Settlement Contracts," The Journal of Legal Studies, University of Chicago Press, vol. 32(1), pages 91-120, January.
    21. Pierre-Pascal Gendron, 1996. "Corporation Tax Asymmetries: An Oligopolistic Supergame Analysis," Working Papers ecpap-96-04, University of Toronto, Department of Economics.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:317:y:2024:i:1:p:25-42. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.