2015/08/31 by Mehdi Madani, Madani, Mehdi, Mathieu Van Vyve +1
Decision Sciences · Engineering · #Auction Theory and Applications #Electric Power System Optimization #FOS: Mathematics #Optimization and Control (math.OC) #Smart Grid Energy Management
paper · pdf · doi:10.48550/arxiv.1508.07967
openalex publication_date 2015/08/31 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
We examine the problem of clearing day-ahead electricity market auctions\nwhere each bidder, whether a producer or consumer, can specify a minimum profit\nor maximum payment condition constraining the acceptance of a set of bid curves\nspanning multiple time periods in locations connected through a transmission\nnetwork with linear constraints. Such types of conditions are for example\nconsidered in the Spanish and Portuguese day-ahead markets. This helps\ndescribing the recovery of start-up costs of a power plant, or analogously for\na large consumer, utility reduced by a constant term. A new market model is\nproposed with a corresponding MILP formulation for uniform locational price\nday-ahead auctions, handling bids with a minimum profit or maximum payment\ncondition in a uniform and computationally-efficient way. An exact\ndecomposition procedure with sparse strengthened Benders cuts derived from the\nMILP formulation is also proposed. The MILP formulation and the decomposition\nprocedure are similar to computationally-efficient approaches previously\nproposed to handle so-called block bids according to European market rules,\nthough the clearing conditions could appear different at first sight. Both\nsolving approaches are also valid to deal with both kinds of bids\nsimultaneously, as block bids with a minimum acceptance ratio, generalizing\nfully indivisible block bids, are but a special case of the MP bids introduced\nhere. We argue in favour of the MP bids by comparing them to previous models\nfor minimum profit conditions proposed in the academic literature, and to the\nmodel for minimum income conditions used by the Spanish power exchange OMIE.\n