Decomposition model and interior point methods for optimal spot pricing of electricity in deregulation environments

TLDR

The model’s features are compared to existing pricing models and classical economic dispatch. The paper presents an integrated optimal spot pricing model for electricity markets. The model derives optimal nodal real‑time prices for active and reactive power, decomposes them into generation, loss, and ancillary service components, and is implemented by augmenting Newton OPF with interior‑point algorithms to avoid volatile gauge issues. Case studies on 5‑bus and IEEE 30‑bus systems demonstrate the effectiveness of the proposed method.

Abstract

In this paper, an integrated optimal spot pricing model is presented first. The proposed model includes the detailed derivation of optimal nodal specific real-time prices for active and reactive powers, and the method to decompose them into different components corresponding to generation, loss, and many selected ancillary services such as spinning reserve, voltage control and security control. The features of the proposed model are discussed in relationship to existing pricing models and classical economic dispatch. The model is then implemented by modifying existing Newton OPF methods through interior point algorithms, which can effectively avoid "go" "no go" gauge (i.e. highly volatile) in the calculation of spot prices. Case studies on 5-bus and IEEE 30-bus systems are reported to illustrate the proposed method.