On Minimum-Uplift Pricing for Electricity Markets.

Optimality and equilibrium principles serve to characterize pricing and settlement rules in electricity market designs. Practical electricity markets include both approximations and nonconvexities that deviate from the pure case of the simple equilibrium pricing model. Recent results on equilibrium price characterizations for a class of nonconvex optimization problems provide new insight of direct relevance to electricity markets. The dayahead electricity market application illustrates the key innovation in equilibrium pricing. A minimum-uplift pricing approach provides a related theoretical framework that is closer to actual practice.