NDLI: Achieving equilibrium and local incentive compatibility for electricity markets by using redundant constraints

Content Provider	IEEE Xplore Digital Library
Author	Bingjie Zhang Luh, P.B. Litvinov, E. Tongxin Zheng Feng Zhao
Copyright Year	2010
Description	Author affiliation: Department of Electrical and Computer Engineering, University of Connecticut, Storrs, CT 06269, USA (Bingjie Zhang; Luh, P.B.) \|\| Systems Architecture and Technology, ISO New England, Holyoke, MA 01040-2841, USA (Litvinov, E.; Tongxin Zheng; Feng Zhao)
Abstract	In the current US day-ahead electricity markets, auction is complicated because of the existence of both discrete variables and continuous variables, which implies that there may be no linear prices to support equilibrium. To meet the system demand, the Independent System Operator (ISO) uses lump sum “uplift payments” to make generators follow its schedule. However, these uplift payments are opaque and difficult to hedge in terms of price signals. In addition, there are incentives for suppliers to bid other than their true costs. Untruthful bidding is undesirable, since in this case minimizing the total bid cost does not imply minimizing the total production cost, or maximizing the social welfare. As a result, the market may not be efficient. In this paper, system-wide redundant constraints on weighted generation levels are introduced to the day-ahead energy market to achieve equilibrium. With multipliers relaxing system demand constraints and redundant constraints serving as multipart prices, equilibrium can be achieved under the general condition that the optimal primal solution is among subproblem solutions for all units. Although incentive compatibility may not be achievable, the novel “local incentive compatibility” concept is introduced and quantified as the second best alternative to incentive compatibility.
Starting Page	2232
Ending Page	2237
File Size	695982
Page Count	6
File Format	PDF
ISBN	9781424467129
e-ISBN	9781424467129
DOI	10.1109/WCICA.2010.5554298
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2010-07-07
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Pricing Generators Silicon Electricity supply industry ISO Biological system modeling Schedules electricity market Equilibrium local incentive compatibility mechanism design
Content Type	Text
Resource Type	Article

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