Necessary and sufficient conditions for optimal offers in electricity markets

Necessary and sufficient conditions for optimal offers in electricity markets

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Article ID: iaor2005248
Country: United States
Volume: 41
Issue: 4
Start Page Number: 1212
End Page Number: 1228
Publication Date: Dec 2002
Journal: SIAM Journal on Control and Optimization
Authors: ,
Keywords: electricity
Abstract:

In this paper, we consider the optimal policy for a generator offering power into as wholesale electricity market operating under a pool arrangement. Anderson and Philpott recently discussed necessary conditions for an optimal offer curve when there is uncertainty in the demand and in the behavior of other participants in the market. They show that the objective function in these circumstances can be expressed as a line integral along the offer curve of a profit function integrated with respect to a market distribution function. In this paper, we prove the existence of an optimal offer stack, and we extend the analysis to include necessary conditions of a higher order in the presence of horizontal and/or vertical sections in an offer curve. Finally, we establish sufficient conditions for an offer curve to be locally optimal.

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