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

Yuzhou Jiang and Ramteen Sioshansi

European Journal of Operational Research, 2024, vol. 317, issue 1, 25-42

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.

Keywords: OR in energy; Bi-level optimization; Power-system economics; Unit commitment; Economic dispatch (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:317:y:2024:i:1:p:25-42

DOI: 10.1016/j.ejor.2024.01.040

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