2015/10/28 by Víctor M. Zavala, Kibaek Kim, Zavala, Victor M. +5 · 1 citation
Engineering · #Electric Power System Optimization #FOS: Economics and business #FOS: Mathematics #General Economics (econ.GN) #Optimal Power Flow Distribution #Optimization and Control (math.OC) #Smart Grid Energy Management
paper · pdf · doi:10.48550/arxiv.1510.08335
openalex publication_date 2015/10/28 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
We argue that deterministic market clearing formulations introduce arbitrary\ndistortions between day-ahead and expected real-time prices that bias economic\nincentives and block diversification. We extend and analyze the stochastic\nclearing formulation proposed by Pritchard et al. (2010) in which the social\nsurplus function induces penalties between day-ahead and real-time quantities.\nWe prove that the formulation yields price distortions that are bounded by the\nbid prices, and we show that adding a similar penalty term to transmission\nflows and phase angles ensures boundedness throughout the network. We prove\nthat when the price distortions are zero, day-ahead quantities converge to the\nquantile of real-time counterparts. The undesired effects of price distortions\nsuggest that stochastic settings provide significant benefits over\ndeterministic ones that go beyond social surplus improvements. We propose\nadditional metrics to evaluate these benefits.\n