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Price-region bids in electricity markets

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  • Bobo, Lucien
  • Mitridati, Lesia
  • Taylor, Josh A.
  • Pinson, Pierre
  • Kazempour, Jalal

Abstract

Current bid formats in pool-based electricity markets are ill-equipped to accommodate the broad range of non-conventional sources of flexibility, such as demand response and interconnected heating, natural gas and water infrastructure networks. To address this issue, this paper introduces the novel price-region bid format to be used in both forward electricity markets and financial right auctions. We show that price-region bids are able to accommodate a broad range of techno-economic characteristics, including complex spatial and temporal couplings, and facilitate market access to non-conventional flexibility providers. We then show that this new bid format is compatible with existing market structures, and satisfies desirable market properties under common assumptions. Three numerical studies are provided: two motivating examples based on a district heating utility and a cascaded hydro power plant, and a case study based on an integrated power and heat system. These studies illustrate the inability of existing bid formats to accommodate flexible resources, and show how price-region bids overcome this shortcoming.

Suggested Citation

  • Bobo, Lucien & Mitridati, Lesia & Taylor, Josh A. & Pinson, Pierre & Kazempour, Jalal, 2021. "Price-region bids in electricity markets," European Journal of Operational Research, Elsevier, vol. 295(3), pages 1056-1073.
    • Handle: RePEc:eee:ejores:v:295:y:2021:i:3:p:1056-1073
    DOI: 10.1016/j.ejor.2021.03.024
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    Cited by:

    1. Anna Schwele & Christos Ordoudis & Pierre Pinson & Jalal Kazempour, 2021. "Coordination of power and natural gas markets via financial instruments," Computational Management Science, Springer, vol. 18(4), pages 505-538, October.
    2. Pierre Pinson, 2023. "What may future electricity markets look like?," Papers 2302.02833, arXiv.org, revised Feb 2023.
    3. Yang, Yifan & Guo, Ju’e & Li, Yi & Zhou, Jiandong, 2024. "Forecasting day-ahead electricity prices with spatial dependence," International Journal of Forecasting, Elsevier, vol. 40(3), pages 1255-1270.
    4. Zhang, Weiqi & Zavala, Victor M., 2022. "Remunerating space–time, load-shifting flexibility from data centers in electricity markets," Applied Energy, Elsevier, vol. 326(C).

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