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Consumer payment minimization under uniform pricing: A mixed-integer linear programming approach

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  • Fernández-Blanco, Ricardo
  • Arroyo, José M.
  • Alguacil, Natalia

Abstract

This paper presents a multi-period auction for a day-ahead pool-based electricity market in which consumer payment for energy is minimized under uniform pricing. This optimization problem has been recently characterized as a non-separable, non-linear, mixed-integer, and combinatorial problem for which exact solution techniques are unavailable. We present a novel approach suitable for existing mixed-integer linear solvers. A major contribution of this paper is the explicit characterization of uniform market-clearing prices as primal decision variables. The proposed methodology allows considering both quadratic and piecewise linear supply offers. In addition, the market-clearing procedure also takes into account inter-temporal operational constraints such as start-ups, ramp rates, and minimum up and down times, which may be part of generation offers. This approach provides the system operator and market agents with a valuable tool to assess consumer payment minimization versus currently used declared social welfare maximization. This conclusion is backed by simulation results obtained with off-the-shelf software.

Suggested Citation

  • Fernández-Blanco, Ricardo & Arroyo, José M. & Alguacil, Natalia, 2014. "Consumer payment minimization under uniform pricing: A mixed-integer linear programming approach," Applied Energy, Elsevier, vol. 114(C), pages 676-686.
    • Handle: RePEc:eee:appene:v:114:y:2014:i:c:p:676-686
    DOI: 10.1016/j.apenergy.2013.10.015
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    2. G. Cobos, Noemi & Arroyo, José M. & Alguacil, Natalia & Street, Alexandre, 2018. "Network-constrained unit commitment under significant wind penetration: A multistage robust approach with non-fixed recourse," Applied Energy, Elsevier, vol. 232(C), pages 489-503.
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    5. Khayyam, Hamid & Naebe, Minoo & Bab-Hadiashar, Alireza & Jamshidi, Farshid & Li, Quanxiang & Atkiss, Stephen & Buckmaster, Derek & Fox, Bronwyn, 2015. "Stochastic optimization models for energy management in carbonization process of carbon fiber production," Applied Energy, Elsevier, vol. 158(C), pages 643-655.
    6. Iacopo Savelli & Bertrand Corn'elusse & Antonio Giannitrapani & Simone Paoletti & Antonio Vicino, 2017. "A New Approach to Electricity Market Clearing With Uniform Purchase Price and Curtailable Block Orders," Papers 1711.07731, arXiv.org, revised Jun 2018.
    7. Bertrand Corn'elusse & Iacopo Savelli & Simone Paoletti & Antonio Giannitrapani & Antonio Vicino, 2018. "A Community Microgrid Architecture with an Internal Local Market," Papers 1810.09803, arXiv.org, revised Feb 2019.
    8. Glotić, Arnel & Zamuda, Aleš, 2015. "Short-term combined economic and emission hydrothermal optimization by surrogate differential evolution," Applied Energy, Elsevier, vol. 141(C), pages 42-56.
    9. Lange, Sebastian & Sokolowski, Peter & Yu, Xinghuo, 2022. "An efficient, open-bid procurement auction for small-scale electricity markets," Applied Energy, Elsevier, vol. 314(C).
    10. Savelli, Iacopo & De Paola, Antonio & Li, Furong, 2020. "Ex-ante dynamic network tariffs for transmission cost recovery," Applied Energy, Elsevier, vol. 258(C).

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