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On an equilibrium problem with complementarity constraints formulation of pay-as-clear electricity market with demand elasticity

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Abstract

We consider a model of pay-as-clear electricity market based on a Equilibrium Problem with Complementarity Constraints approach where the producers are playing a noncooperative game parameterized by the decisions of regulator of the market (ISO). In the proposed approach the bids are assumed to be convex quadratic functions of the production quantity. The demand is endogenously determined. The ISO problem aims to maximize the total welfare of the market. The demand being elastic, this total welfare take into account at the same time the willingness to pay of the aggregated consumer, as well as the cost of transactions. The market clearing will determine the market price in a pay-as-clear way. An explicit formula for the optimal solution of the ISO problem is obtained and the optimal price is proved to be unique. We also state some conditions for the existence of equilibria for this electricity market with elastic demand. Some numerical experiments on a simplified market model are also provided.

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Authors and Affiliations

  1. Department of Economics and Management, Università degli Studi di Brescia, Via San Faustino 74/B, Brescia, Italy

    Elisabetta Allevi & Rossana Riccardi

  2. PROMES UPR CNRS 8521, University of Perpignan Via Domitia, Technosud, Perpignan, France

    Didier Aussel

Authors
  1. Elisabetta Allevi
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  2. Didier Aussel
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  3. Rossana Riccardi
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Corresponding author

Correspondence to Rossana Riccardi.

Additional information

The second author wants to sincerely thank the Università Degli Studi di Brescia for its hospitality. Indeed an important part of this work has been done during two research visits of this author in the Department of Economics and Management of this University. The work of the second author has been partially supported by the “FMJH Program Gaspard Monge in optimization and operation research”, and from the support to this program from EDF. The first and third authors were partially supported by the UniBS H&W Project Brescia 202020”.

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Allevi, E., Aussel, D. & Riccardi, R. On an equilibrium problem with complementarity constraints formulation of pay-as-clear electricity market with demand elasticity. J Glob Optim 70, 329–346 (2018). https://doi.org/10.1007/s10898-017-0595-9

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  • DOI: https://doi.org/10.1007/s10898-017-0595-9

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