Optimizing Power Market Clearing with Segmented Electricity Prices: A Bilevel Model

Chong Wang (), Mingfeng Ni, Yan Shi, Luxi Zhang, Wenjie Li and Xueling Li
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Chong Wang: School of Economics and Management, Northeast Electric Power University, Jilin City 132012, China
Mingfeng Ni: School of Economics and Management, Northeast Electric Power University, Jilin City 132012, China
Yan Shi: Power Supply Service Supervision and Support Center, State Grid East Inner Mongolia Electric Power Co., Ltd., Inner Mongolia Autonomous Region, Tongliao 010020, China
Luxi Zhang: Power Supply Service Supervision and Support Center, State Grid East Inner Mongolia Electric Power Co., Ltd., Inner Mongolia Autonomous Region, Tongliao 010020, China
Wenjie Li: Power Supply Service Supervision and Support Center, State Grid East Inner Mongolia Electric Power Co., Ltd., Inner Mongolia Autonomous Region, Tongliao 010020, China
Xueling Li: School of Management, Jilin University, Changchun 130012, China

Sustainability, 2023, vol. 15, issue 18, 1-22

Abstract: The energy sector plays a critical role in reducing emissions by transitioning to renewable energy. However, integrating renewable energy into the electricity market impacts market clearing. This article investigates market clearing decisions of renewable and traditional energy companies, considering electricity price segmentation. We propose an interprovincial bilevel market clearing decision-making model. The upper level optimizes the provincial market through a unilateral bidding model, minimizing the operating cost of the power market as the objective function. Meanwhile, the lower level optimizes power purchases by minimizing the cost of acquiring interprovincial renewable energy. A case study was conducted to determine the optimal interprovincial renewable energy purchasing power for multiple energy generation companies, considering the minimum market operating cost and segmented electricity prices. The proposed bilevel market clearing model captures the interplay between intraprovincial and interprovincial transactions, integrating electricity price and ecological attributes. By solving this model, we can attain optimal interprovincial electricity purchase of renewable energy, minimizing the overall market operating cost in the province. Through simulation, 18% of interprovincial transactions are needed to absorb 7.21 KWH of renewable energy from other provinces. When considering price segmentation, the cross-provincial two-level market clearing model can reduce the market cost by CNY 1,554,700.

Keywords: segmented electricity price; electricity market; renewable energy; double-layer clearance model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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