Pricing in non-convex markets with quadratic deliverability costs

Xiaolong Kuang, Alberto Lamadrid and Luis F. Zuluaga

Energy Economics, 2019, vol. 80, issue C, 123-131

Abstract: This article studies the problem of obtaining equilibrium clearing prices for markets with non-convexities when it is relevant to account for convex quadratic deliverability costs and constraints. In a general market, such a situation arises when quadratic commodity or transactions costs are relevant. In the particular case of electricity markets, there is a mix of resources including dispatchable and renewable energy sources, leading to the presence of integer variables and quadratic costs reflecting ramping needs. To illustrate our results, we compute and analyze the equilibrium clearing prices of the Scarf's classical market problem with the addition of ramping costs.

Keywords: Market-clearing prices; Quadratic costs; Ramping costs; Unit commitment; Mixed-integer quadratic programming; Renewable energy sources (search for similar items in EconPapers)
JEL-codes: D40 L94 Q48 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:80:y:2019:i:c:p:123-131

DOI: 10.1016/j.eneco.2018.12.022

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