publication . Article . Preprint . Conference object . 2013

Pricing of fluctuations in electricity markets

John N. Tsitsiklis; Yunjian Xu;
Open Access English
  • Published: 01 Jul 2013
  • Publisher: Elsevier BV
  • Country: United States
Abstract
In an electric power system, demand fluctuations may result in significant ancillary cost to suppliers. Furthermore, in the near future, deep penetration of volatile renewable electricity generation is expected to exacerbate the variability of demand on conventional thermal generating units. We address this issue by explicitly modeling the ancillary cost associated with demand variability. We argue that a time-varying price equal to the suppliers' instantaneous marginal cost may not achieve social optimality, and that consumer demand fluctuations should be properly priced. We propose a dynamic pricing mechanism that explicitly encourages consumers to adapt their...
Subjects
arXiv: Computer Science::Computer Science and Game Theory
free text keywords: Mathematics - Optimization and Control, Mathematics - Dynamical Systems, Convexity, Offset (computer science), Marginal cost, Electricity generation, Electricity, business.industry, business, Electric power system, Renewable energy, Mathematical optimization, Dynamic pricing, Econometrics, Computer science, Management Science and Operations Research, Modelling and Simulation, Information Systems and Management, Electricity market, Microeconomics, Economics, Incentive
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publication . Article . Preprint . Conference object . 2013

Pricing of fluctuations in electricity markets

John N. Tsitsiklis; Yunjian Xu;