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Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions

Author

Listed:
  • Farhan Hyder

    (Department of Electrical and Microelectronic Engineering, Rochester Institute of Technology, Rochester, NY 14623, USA)

  • Bing Yan

    (Department of Electrical and Microelectronic Engineering, Rochester Institute of Technology, Rochester, NY 14623, USA)

  • Mikhail Bragin

    (Department of Electrical and Computer Engineering, University of Connecticut, Storrs, CT 06269, USA)

  • Peter Luh

    (Department of Electrical and Computer Engineering, University of Connecticut, Storrs, CT 06269, USA
    Dr. P. B. Luh, a co-supervisor of this project, sadly passed away in November 2022. He was a professor emeritus in the Department of Electrical and Computer Engineering at the University of Connecticut, Storrs, CT, USA, and also affiliated with the Department of Electrical Engineering at National Taiwan University, Taipei, Taiwan. In honor of our esteemed colleague and mentor, we, the co-authors, dedicate this paper to commemorating Dr. Luh’s remarkable contributions and enduring legacy.)

Abstract

Energy prices are usually determined by the marginal costs obtained by solving economic dispatch problems without considering commitment costs. Hence, generating units are compensated through uplift payments. However, uplift payments may undermine market transparency as they are not publicly disclosed. Alternatively, energy prices can be obtained from the unit commitment problem which considers commitment costs. But, due to non-convexity, prices may not monotonically increase with demand. To resolve this issue, convex hull pricing has been introduced. It is defined as the slope of the convex envelope of the total cost function over the convex hull of a unit commitment (UC) problem. Although several approaches have been developed, a relevant survey has not been found to aid the understanding of convex hull pricing from the current limited literature. This paper provides a systematic survey of convex hull pricing. It reviews, compares, and links various existing approaches, focusing on the modeling and computation of convex hull prices. Furthermore, this paper explores potential areas of improvement and future challenges due to the ongoing efforts for power system decarbonization.

Suggested Citation

  • Farhan Hyder & Bing Yan & Mikhail Bragin & Peter Luh, 2024. "Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions," Energies, MDPI, vol. 17(19), pages 1-20, September.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:19:p:4851-:d:1487165
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    References listed on IDEAS

    as
    1. Mikhail A. Bragin & Peter B. Luh & Joseph H. Yan & Nanpeng Yu & Gary A. Stern, 2015. "Convergence of the Surrogate Lagrangian Relaxation Method," Journal of Optimization Theory and Applications, Springer, vol. 164(1), pages 173-201, January.
    2. Yongpei Guan & Kai Pan & Kezhuo Zhou, 2018. "Polynomial time algorithms and extended formulations for unit commitment problems," IISE Transactions, Taylor & Francis Journals, vol. 50(8), pages 735-751, August.
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