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Carlos Ruiz - One of the best experts on this subject based on the ideXlab platform.
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Generation Investment equilibria with strategic producers part ii case studies
IEEE Transactions on Power Systems, 2013Co-Authors: Jalal S Kazempour, Antonio J Conejo, Carlos RuizAbstract:This paper analyzes numerically the approach reported in the companion paper for identifying Generation Investment equilibria in an electricity market where the producers behave strategically. To this end, a two-node illustrative example and a large-scale case study based on the IEEE reliability test system (RTS) are examined and the results obtained are reported and discussed.
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Generation Investment equilibria with strategic producers part i formulation
IEEE Transactions on Power Systems, 2013Co-Authors: Jalal S Kazempour, Antonio J Conejo, Carlos RuizAbstract:The first of this two-paper series proposes a methodology to characterize Generation Investment equilibria in a pool-based network-constrained electricity market, where the producers behave strategically. To this end, the Investment problem of each strategic producer is represented using a bilevel model, whose upper-level problem determines the optimal Investment and the supply offering curves to maximize its profit, and whose several lower-level problems represent different market clearing scenarios. This model is transformed into a mathematical program with equilibrium constraint (MPEC) through replacing the lower-level problems by their optimality conditions. The joint consideration of all producer MPECs, one per producer, constitutes an equilibrium problem with equilibrium constraints (EPEC). To identify the solutions of this EPEC, each MPEC problem is replaced by its Karush-Kuhn-Tucker (KKT) conditions, which are in turn linearized. The resulting mixed-integer linear system of equalities and inequalities allows determining the EPEC equilibria through an auxiliary MILP problem.
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strategic Generation Investment considering futures and spot markets
IEEE Transactions on Power Systems, 2012Co-Authors: S J Kazempour, Antonio J Conejo, Carlos RuizAbstract:Futures markets are increasingly relevant for trading electric energy as they help to hedge the volatility of the pool prices. In this paper, we analyze the effect of such futures markets on the Investment decisions of a strategic electricity producer. To this end, we propose a bilevel model whose upper-level problem represents the Investment and offering actions of the producer, and whose multiple lower-level problems represent the clearing of both the futures markets and the pool under different operating conditions. Such model is equivalent to a mathematical program with equilibrium constraints that can be recast as a tractable mixed-integer linear programming problem and that allows assessing the impact of the futures markets on the Investment decisions of a strategic producer.
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strategic Generation Investment using a complementarity approach
IEEE Transactions on Power Systems, 2011Co-Authors: S J Kazempour, Antonio J Conejo, Carlos RuizAbstract:This paper provides a methodology to assist a strategic producer in making informed decisions on Generation Investment. A single target year is considered with demand variations modeled through blocks. The strategic behavior of the producer is represented through a bilevel model: the upper-level considers both Investment decisions and strategic production actions and the lower-level corresponds to market clearing. Prices are obtained as dual variables of power balance equations. Rival uncertainties (on offering and Investment) are characterized through scenarios. The resulting model is a large-scale mixed-integer LP problem solvable using currently available branch-and-cut techniques. Results pertaining to an illustrative example and a case study are reported and discussed.
Antonio J Conejo - One of the best experts on this subject based on the ideXlab platform.
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Generation Investment equilibria with strategic producers part ii case studies
IEEE Transactions on Power Systems, 2013Co-Authors: Jalal S Kazempour, Antonio J Conejo, Carlos RuizAbstract:This paper analyzes numerically the approach reported in the companion paper for identifying Generation Investment equilibria in an electricity market where the producers behave strategically. To this end, a two-node illustrative example and a large-scale case study based on the IEEE reliability test system (RTS) are examined and the results obtained are reported and discussed.
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Generation Investment equilibria with strategic producers part i formulation
IEEE Transactions on Power Systems, 2013Co-Authors: Jalal S Kazempour, Antonio J Conejo, Carlos RuizAbstract:The first of this two-paper series proposes a methodology to characterize Generation Investment equilibria in a pool-based network-constrained electricity market, where the producers behave strategically. To this end, the Investment problem of each strategic producer is represented using a bilevel model, whose upper-level problem determines the optimal Investment and the supply offering curves to maximize its profit, and whose several lower-level problems represent different market clearing scenarios. This model is transformed into a mathematical program with equilibrium constraint (MPEC) through replacing the lower-level problems by their optimality conditions. The joint consideration of all producer MPECs, one per producer, constitutes an equilibrium problem with equilibrium constraints (EPEC). To identify the solutions of this EPEC, each MPEC problem is replaced by its Karush-Kuhn-Tucker (KKT) conditions, which are in turn linearized. The resulting mixed-integer linear system of equalities and inequalities allows determining the EPEC equilibria through an auxiliary MILP problem.
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strategic Generation Investment considering futures and spot markets
IEEE Transactions on Power Systems, 2012Co-Authors: S J Kazempour, Antonio J Conejo, Carlos RuizAbstract:Futures markets are increasingly relevant for trading electric energy as they help to hedge the volatility of the pool prices. In this paper, we analyze the effect of such futures markets on the Investment decisions of a strategic electricity producer. To this end, we propose a bilevel model whose upper-level problem represents the Investment and offering actions of the producer, and whose multiple lower-level problems represent the clearing of both the futures markets and the pool under different operating conditions. Such model is equivalent to a mathematical program with equilibrium constraints that can be recast as a tractable mixed-integer linear programming problem and that allows assessing the impact of the futures markets on the Investment decisions of a strategic producer.
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strategic Generation Investment under uncertainty via benders decomposition
IEEE Transactions on Power Systems, 2012Co-Authors: S J Kazempour, Antonio J ConejoAbstract:We address the Generation Investment problem faced by a strategic power producer and consider a detailed description of the uncertain parameters involved, namely, rival producer Investment and market offering, and demand growth. To identify optimal Investment decisions, we consider a target year and propose a bilevel model whose upper-level problem determines Investment and offering decisions to maximize expected profit, and whose many lower-level problems represent market clearing conditions per demand block and scenario. Since the producer total expected profit is sufficiently convex with respect to Investment decisions, a Benders' decomposition approach is proposed that results in a tractable formulation even if hundred of scenarios are used to describe uncertain parameters. Extensive numerical simulations based on realistic case studies show the good performance of the proposed decomposition approach.
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strategic Generation Investment using a complementarity approach
IEEE Transactions on Power Systems, 2011Co-Authors: S J Kazempour, Antonio J Conejo, Carlos RuizAbstract:This paper provides a methodology to assist a strategic producer in making informed decisions on Generation Investment. A single target year is considered with demand variations modeled through blocks. The strategic behavior of the producer is represented through a bilevel model: the upper-level considers both Investment decisions and strategic production actions and the lower-level corresponds to market clearing. Prices are obtained as dual variables of power balance equations. Rival uncertainties (on offering and Investment) are characterized through scenarios. The resulting model is a large-scale mixed-integer LP problem solvable using currently available branch-and-cut techniques. Results pertaining to an illustrative example and a case study are reported and discussed.
Jay Zarnikau - One of the best experts on this subject based on the ideXlab platform.
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does locational marginal pricing impact Generation Investment location decisions an analysis of texas s wholesale electricity market
Journal of Regulatory Economics, 2020Co-Authors: David P Brown, Jay Zarnikau, Chi Keung WooAbstract:Using data from Texas’s wholesale electricity market, we investigate the relationship between nodal prices and Investment location decisions of utility-scale Generation. We find some evidence that new Investment arises in areas with recently elevated nodal prices. However, we find no evidence that new Generation resources receive a nodal price premium post-entry as projected by the expectation of higher nodal prices. Further, a logit regression analysis suggests that the probability of natural-gas-fired Generation Investments tends to increase with expected nodal prices in peak hours. However, the estimated relationship is statistically and economically weak and sensitive to model specification. These findings suggest other factors are more important drivers than nodal prices of location decisions for utility-scale Generation Investments in Texas.
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texas s operating reserve demand curve s Generation Investment incentive
Energy Policy, 2020Co-Authors: Jay Zarnikau, C H TsaiAbstract:Faced with reserve margin projections well below the adopted target of 13.75% of the system peak forecast, the Public Utility Commission of Texas on 01/17/2019 ordered the state's grid operator, the Electric Reliability Council of Texas, to “right shift” the operating reserve demand curve (ORDC) to increase generators' revenue from energy sales in ERCOT's real-time market (RTM). Using a large sample of 15-min data for the backcast period of 01/01/2015 through 12/31/2018, we calculate the ORDC shift's impact on RTM prices and Investment incentives for natural-gas-fired Generation (NGFG). Had the ORDC shift been in effect in the backcast period, the resulting RTM price increases in 2018 could suffice to justify NGFG Investment, though not in the prior years of 2015, 2016 and 2017. While the actual ORDC shift occurred on 03/01/2019 had a large impact on RTM prices in the ensuing six-month period of March–August 2019, Texas's planned renewable Generation is expected to erode NGFG's operating profit, thus diminishing the ORDC's Investment incentive over time. Hence, Texas's energy-only market design will likely need further refinements to solve the missing money problem of inadequate NGFG Investment incentive.
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does locational marginal pricing impact Generation Investment location decisions an analysis of texas s wholesale electricity market
Research Papers in Economics, 2020Co-Authors: David P Brown, Jay Zarnikau, Chi Keung WooAbstract:Using data from Texas’s wholesale electricity market, we investigate if there is a relationship between nodal prices and Investment location decisions of utility scale Generation. We find some evidence that new Investment arises in areas with recently elevated nodal prices. However, we find no evidence that new Generation resources receive a nodal price premium post-entry as projected by the expectation of higher nodal prices. Further, we employ a regression analysis to test the relationship between expected nodal prices and the probability of entry at a given node. While this analysis finds a positive relationship between expected nodal prices and Investment for natural-gas-fueled peaking assets, this relationship is sensitive to model specification. Our findings suggest that factors other than nodal prices are more likely drivers of utility scale Generation capacity Investment location decisions in Texas.
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a wholesale electricity market design sans missing money and price manipulation
Energy Policy, 2019Co-Authors: Chi Keung Woo, Irena Milstein, Asher Tishler, Jay ZarnikauAbstract:Abstract Using reliability differentiation via tolling agreements with diverse heat rates and fuel types, we propose an efficient wholesale electricity market design under demand and supply uncertainty. Mainly based on North America's market experience, our proposed design adopts an independent system operator's (ISO's) existing practice of least-cost dispatch of heterogeneous Generation units, real-time energy price determination and capacity rationing. It solves the missing money problem of inadequate incentive for thermal Generation Investment, without requiring the ISO to operate centralized capacity auctions, make capacity payments, set high energy price caps, or subsidize market entry. It preempts independent power producers' price manipulation in the ISO's real-time market for energy, thus easing the ISO's burden of market monitoring. It suggests two-part pricing of end-use consumption and power demand of a load serving entity's retail customers, thus meaningfully linking the wholesale and retail markets. It is applicable to countries that have implemented wholesale competition or are in the process of doing so. Hence, its policy implication is that it should be considered in the ongoing debate of electricity reliability and market competition.
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a wholesale electricity market design sans missing money and price manipulation
Social Science Research Network, 2019Co-Authors: Chi Keung Woo, Asher Tishler, Jay ZarnikauAbstract:Using reliability differentiation via tolling agreements with diverse heat rates and fuel types, we propose an efficient wholesale electricity market design under demand and supply uncertainty. Mainly based on North America’s market experience, our proposed design adopts an independent system operator’s (ISO’s) existing practice of least-cost dispatch of heterogeneous Generation units, real-time energy price determination and capacity rationing. It solves the missing money problem of inadequate incentive for Generation Investment, without requiring the ISO to operate centralized capacity auctions, make capacity payments, set high energy price caps, or subsidize market entry. It preempts independent power producers’ price manipulation in the ISO’s real-time market for energy, thus easing the ISO’s burden of market monitoring. It suggests two-part pricing of end-use consumption of a load serving entity’s retail customers, meaningfully linking the wholesale and retail markets. It is applicable to countries that have implemented wholesale competition or are in the process of doing so. Hence, its policy implication is that it should be considered in the ongoing debate of electricity reliability and market competition.
Goran Strbac - One of the best experts on this subject based on the ideXlab platform.
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Investigating the impact of flexible demand on market-based Generation Investment planning
International Journal of Electrical Power & Energy Systems, 2020Co-Authors: Temitayo Oderinwale, Dimitrios Papadaskalopoulos, Goran StrbacAbstract:Abstract Demand flexibility has attracted significant interest given its potential to address techno-economic challenges associated with the decarbonisation of electricity systems. However, previous work has investigated its long-term impacts through centralized Generation planning models which do not reflect the current deregulated environment. At the same time, existing market-based Generation planning models are inherently unable to capture the demand flexibility potential since they neglect time-coupling effects and system reserve requirements in their representation of the electricity market. This paper investigates the long-term impacts of demand flexibility in the deregulated environment, by proposing a time-coupling, bi-level optimization model of a self-interested Generation company’s Investment planning problem, which captures for the first time the energy shifting flexibility of the demand side and the operation of reserve markets with demand side participation. Case studies investigate different cases regarding the flexibility of the demand side and different market design options regarding the allocation of reserve payments. The obtained results demonstrate that, in contrast with previous centralised planning models, the proposed model can capture the dependency of Generation Investment decisions and the related impacts of demand flexibility on the electricity market design and the subsequent strategic response of the self-interested Generation company.
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impact of energy storage on market based Generation Investment planning
IEEE PowerTech Conference, 2019Co-Authors: Temitayo Oderinwale, Dimitrios Papadaskalopoulos, Goran StrbacAbstract:Previous work has analyzed the role of energy storage (ES) on Generation Investment planning through centralised cost-minimization models which are inherited from the era of regulated electricity utilities. This paper investigates this issue in the context of the deregulated market environment by proposing a new strategic Generation Investment planning model. The decision making of a strategic Generation company is modeled through a multi-period bi-level optimization problem, where the upper level determines the profit-maximizing Investment decisions of the Generation company and the lower level represents the market clearing process, accounting for the time-coupling operational characteristics of ES. This bi-level problem is solved after converting it to a single-level mixed-integer linear problem (MILP). Case studies demonstrate that the introduction of ES reduces the total Generation capacity Investment and enhances Investments in “must-run” base-load Generation over flexible peaking Generation, yielding significant system cost savings.
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incorporating demand flexibility in strategic Generation Investment planning
International Conference on the European Energy Market, 2018Co-Authors: Temitayo Oderinwale, Dimitrios Papadaskalopoulos, Goran StrbacAbstract:The envisaged decarbonization of electricity systems has attracted significant interest around the role and value of demand flexibility. However, the impact of this flexibility on Generation Investments in the deregulated electricity industry setting remains a largely unexplored area, since previous relevant work neglects the time-coupling nature of demand shifting potentials. This paper addresses this challenge by proposing a strategic Generation Investment planning model expressing the decision making process of a self-interested Generation company and accounting for the time-coupling operational characteristics of demand flexibility. This model is formulated as a multi-period bi-level optimization problem, which is solved after converting it to a Mathematical Program with Equilibrium Constraints (MPEC). Case studies with the proposed model demonstrate that demand flexibility reduces the total Generation capacity Investment, enhances Investments in baseload Generation and yields significant economic benefits in terms of total system costs and demand payments.
Jalal S Kazempour - One of the best experts on this subject based on the ideXlab platform.
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Generation Investment equilibria with strategic producers part ii case studies
IEEE Transactions on Power Systems, 2013Co-Authors: Jalal S Kazempour, Antonio J Conejo, Carlos RuizAbstract:This paper analyzes numerically the approach reported in the companion paper for identifying Generation Investment equilibria in an electricity market where the producers behave strategically. To this end, a two-node illustrative example and a large-scale case study based on the IEEE reliability test system (RTS) are examined and the results obtained are reported and discussed.
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Generation Investment equilibria with strategic producers part i formulation
IEEE Transactions on Power Systems, 2013Co-Authors: Jalal S Kazempour, Antonio J Conejo, Carlos RuizAbstract:The first of this two-paper series proposes a methodology to characterize Generation Investment equilibria in a pool-based network-constrained electricity market, where the producers behave strategically. To this end, the Investment problem of each strategic producer is represented using a bilevel model, whose upper-level problem determines the optimal Investment and the supply offering curves to maximize its profit, and whose several lower-level problems represent different market clearing scenarios. This model is transformed into a mathematical program with equilibrium constraint (MPEC) through replacing the lower-level problems by their optimality conditions. The joint consideration of all producer MPECs, one per producer, constitutes an equilibrium problem with equilibrium constraints (EPEC). To identify the solutions of this EPEC, each MPEC problem is replaced by its Karush-Kuhn-Tucker (KKT) conditions, which are in turn linearized. The resulting mixed-integer linear system of equalities and inequalities allows determining the EPEC equilibria through an auxiliary MILP problem.