Consumer payment minimization under uniform pricing: A mixed-integer linear programming approach

Ricardo Fernández-Blanco, José M. Arroyo and Natalia Alguacil

Applied Energy, 2014, vol. 114, issue C, 676-686

Abstract: This paper presents a multi-period auction for a day-ahead pool-based electricity market in which consumer payment for energy is minimized under uniform pricing. This optimization problem has been recently characterized as a non-separable, non-linear, mixed-integer, and combinatorial problem for which exact solution techniques are unavailable. We present a novel approach suitable for existing mixed-integer linear solvers. A major contribution of this paper is the explicit characterization of uniform market-clearing prices as primal decision variables. The proposed methodology allows considering both quadratic and piecewise linear supply offers. In addition, the market-clearing procedure also takes into account inter-temporal operational constraints such as start-ups, ramp rates, and minimum up and down times, which may be part of generation offers. This approach provides the system operator and market agents with a valuable tool to assess consumer payment minimization versus currently used declared social welfare maximization. This conclusion is backed by simulation results obtained with off-the-shelf software.

Keywords: Consumer payment minimization; Declared social welfare maximization; Inter-temporal constraints; Market-clearing procedure; Mixed-integer linear programming; Uniform pricing (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (10)

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DOI: 10.1016/j.apenergy.2013.10.015

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