Price-region bids in electricity markets

Lucien Bobo, Lesia Mitridati, Josh A. Taylor, Pierre Pinson and Jalal Kazempour

European Journal of Operational Research, 2021, vol. 295, issue 3, 1056-1073

Abstract: Current bid formats in pool-based electricity markets are ill-equipped to accommodate the broad range of non-conventional sources of flexibility, such as demand response and interconnected heating, natural gas and water infrastructure networks. To address this issue, this paper introduces the novel price-region bid format to be used in both forward electricity markets and financial right auctions. We show that price-region bids are able to accommodate a broad range of techno-economic characteristics, including complex spatial and temporal couplings, and facilitate market access to non-conventional flexibility providers. We then show that this new bid format is compatible with existing market structures, and satisfies desirable market properties under common assumptions. Three numerical studies are provided: two motivating examples based on a district heating utility and a cascaded hydro power plant, and a case study based on an integrated power and heat system. These studies illustrate the inability of existing bid formats to accommodate flexible resources, and show how price-region bids overcome this shortcoming.

Keywords: OR in energy; Electricity markets; Power system flexibility; Price-region bids (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:295:y:2021:i:3:p:1056-1073

DOI: 10.1016/j.ejor.2021.03.024

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