On an equilibrium problem with complementarity constraints formulation of pay-as-clear electricity market with demand elasticity

Elisabetta Allevi (), Didier Aussel () and Rossana Riccardi ()
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Elisabetta Allevi: Università degli Studi di Brescia
Didier Aussel: University of Perpignan Via Domitia
Rossana Riccardi: Università degli Studi di Brescia

Journal of Global Optimization, 2018, vol. 70, issue 2, No 3, 329-346

Abstract: Abstract We consider a model of pay-as-clear electricity market based on a Equilibrium Problem with Complementarity Constraints approach where the producers are playing a noncooperative game parameterized by the decisions of regulator of the market (ISO). In the proposed approach the bids are assumed to be convex quadratic functions of the production quantity. The demand is endogenously determined. The ISO problem aims to maximize the total welfare of the market. The demand being elastic, this total welfare take into account at the same time the willingness to pay of the aggregated consumer, as well as the cost of transactions. The market clearing will determine the market price in a pay-as-clear way. An explicit formula for the optimal solution of the ISO problem is obtained and the optimal price is proved to be unique. We also state some conditions for the existence of equilibria for this electricity market with elastic demand. Some numerical experiments on a simplified market model are also provided.

Keywords: Electricity market; Generalized Nash equilibrium problem; Elastic demand; 49J40; 49J53; 91B26; 49J52 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10898-017-0595-9

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