Optimal Price Zones in Electricity Markets: A Mixed-Integer Multilevel Model and Global Solution Approaches

Journal article


Publication Details

Author(s): Grimm V, Kleinert T, Liers F, Schmidt M, Zöttl G
Journal: Optimization Methods & Software
Publication year: 2017
ISSN: 1055-6788
Language: English


Abstract


Mathematical modeling of market design issues in liberalized electricity markets often leads to mixed-integer nonlinear multilevel optimization problems for which no general-purpose solvers exist and which are intractable in general. In this work, we consider the problem of splitting a market area into a given number of price zones such that the resulting market design yields welfare-optimal outcomes. This problem leads to a challenging multilevel model that contains a graph-partitioning problem with multi-commodity flow connectivity constraints and nonlinearities due to proper economic modeling. Furthermore, it has highly symmetric solutions. We develop different problem-tailored solution approaches. In particular, we present an extended KKT transformation approach as well as a generalized Benders approach that both yield globally optimal solutions. These methods, enhanced with techniques such as symmetry breaking and primal heuristics, are evaluated in detail on academic as well as on realistic instances. It turns out that our approaches lead to effective solution methods for the difficult optimization tasks presented here, where the problem-specific generalized Benders approach performs considerably better than the methods based on KKT transformation.



FAU Authors / FAU Editors

Grimm, Veronika Prof. Dr.
Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie
Kleinert, Thomas
Juniorprofessur für Optimierung von Energiesystemen
Liers-Bergmann, Frauke Prof. Dr.
Professur für Diskrete Optimierung in den Ingenieurwissenschaften
Schmidt, Martin Prof. Dr.
Juniorprofessur für Optimierung von Energiesystemen
Zöttl, Gregor Prof. Dr.
Professur für Volkswirtschaftslehre


Additional Organisation
Lehrstuhl für Wirtschaftsmathematik


How to cite

APA:
Grimm, V., Kleinert, T., Liers, F., Schmidt, M., & Zöttl, G. (2017). Optimal Price Zones in Electricity Markets: A Mixed-Integer Multilevel Model and Global Solution Approaches. Optimization Methods & Software. https://dx.doi.org/10.1080/10556788.2017.1401069

MLA:
Grimm, Veronika, et al. "Optimal Price Zones in Electricity Markets: A Mixed-Integer Multilevel Model and Global Solution Approaches." Optimization Methods & Software (2017).

BibTeX: 

Last updated on 2018-19-04 at 03:58