Panagiotis, Andrianesis, Michael C. Caramanis, and William W. Hogan. “Computation of Convex Hull Prices in Electricity Markets with Non-Convexities using Dantzig-Wolfe Decomposition.” In, 2020. Publisher's VersionAbstract
    —The presence of non-convexities in electricity markets has been an active research area for about two decades. The — inevitable under current marginal cost pricing — problem of guaranteeing that no truthful-bidding market participant incurs losses in the day-ahead (DA) market is addressed in current practice through make-whole payments a.k.a. uplift. Alternative pricing rules have been studied to deal with this problem. Among them, Convex Hull (CH) prices associated with minimum uplift have attracted significant attention. Several US Independent System Operators (ISOs) have considered CH prices but resorted to approximations, mainly because determining exact CH prices is computationally challenging, while providing little intuition about the price formation rational. In this paper, we describe CH price estimation problem by relying on DantzigWolfe decomposition and Column Generation. Moreover, the approach provides intuition on the underlying price formation rational. A test bed of stylized examples elucidate an exposition of the intuition in the CH price formation. In addition, a realistic ISO dataset is used to suggest scalability and validate the proof-of-concept.
    Hogan, William W. Transmission Investment Beneficiaries and Cost Allocation: New Zealand Electricity Authority Proposal, 2020.Abstract

    Excerpt from the introduction:


    In a 2019 Issues Paper under its Transmission Pricing Review, the Electricity Authority of New Zealand set out a framework for efficient electricity system investment, cost allocation, and pricing. The basic design accords with beneficiary-pays principles. The challenges of transmission investment preclude pure market approaches and require consistency across both competitive and monopoly elements of the system. In comments on the Authority’s proposal, submissions of some parties include critiques or alternative recommendations that appeal to implicit assumptions inconsistent with the basic requirements of the technology and associated electricity market components. Although perfection is only possible under narrow conditions, the Authority’s framework provides a careful balance that adheres to first principles and can accommodate workable implementation.