Consumer payment minimization in power pool auctions

Abstract

This paper presents a new methodology within the framework of centralized optimization for calculating optimal generation schedules that minimize energy payments by power pool consumers. This paper addresses issues related to market structure and the operation of power pools, such as bid evaluation, generator no-load and start-up cost recovery, generator unit operating constraints and market clearing price determination. Unlike conventional unit commitment algorithms that minimize total energy production costs, the method presented here minimizes payments by power pool consumers. A payment minimization objective leads to a different unit commitment and dispatch solution, and lower market clearing prices. Additionally, optimal allocation of generator no-load and start-up costs over the scheduling period is integrated in the bid evaluation process, leading to a further reduction in consumer payments.