Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions
Energy prices are usually determined by the marginal costs obtained by solving economic dispatch problems without considering commitment costs. Hence, generating units are compensated through uplift payments. However, uplift payments may undermine market transparency as they are not publicly disclos...
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MDPI AG
2024-09-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/17/19/4851 |
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| author | Farhan Hyder Bing Yan Mikhail Bragin Peter Luh |
| author_facet | Farhan Hyder Bing Yan Mikhail Bragin Peter Luh |
| author_sort | Farhan Hyder |
| collection | DOAJ |
| description | Energy prices are usually determined by the marginal costs obtained by solving economic dispatch problems without considering commitment costs. Hence, generating units are compensated through uplift payments. However, uplift payments may undermine market transparency as they are not publicly disclosed. Alternatively, energy prices can be obtained from the unit commitment problem which considers commitment costs. But, due to non-convexity, prices may not monotonically increase with demand. To resolve this issue, convex hull pricing has been introduced. It is defined as the slope of the convex envelope of the total cost function over the convex hull of a unit commitment (UC) problem. Although several approaches have been developed, a relevant survey has not been found to aid the understanding of convex hull pricing from the current limited literature. This paper provides a systematic survey of convex hull pricing. It reviews, compares, and links various existing approaches, focusing on the modeling and computation of convex hull prices. Furthermore, this paper explores potential areas of improvement and future challenges due to the ongoing efforts for power system decarbonization. |
| format | Article |
| id | doaj-art-2e5f92b5ddeb49ada831091eddd411fd |
| institution | OA Journals |
| issn | 1996-1073 |
| language | English |
| publishDate | 2024-09-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj-art-2e5f92b5ddeb49ada831091eddd411fd2025-08-20T02:16:50ZengMDPI AGEnergies1996-10732024-09-011719485110.3390/en17194851Convex Hull Pricing for Unit Commitment: Survey, Insights, and DiscussionsFarhan Hyder0Bing Yan1Mikhail Bragin2Peter Luh3Department of Electrical and Microelectronic Engineering, Rochester Institute of Technology, Rochester, NY 14623, USADepartment of Electrical and Microelectronic Engineering, Rochester Institute of Technology, Rochester, NY 14623, USADepartment of Electrical and Computer Engineering, University of Connecticut, Storrs, CT 06269, USADepartment of Electrical and Computer Engineering, University of Connecticut, Storrs, CT 06269, USAEnergy prices are usually determined by the marginal costs obtained by solving economic dispatch problems without considering commitment costs. Hence, generating units are compensated through uplift payments. However, uplift payments may undermine market transparency as they are not publicly disclosed. Alternatively, energy prices can be obtained from the unit commitment problem which considers commitment costs. But, due to non-convexity, prices may not monotonically increase with demand. To resolve this issue, convex hull pricing has been introduced. It is defined as the slope of the convex envelope of the total cost function over the convex hull of a unit commitment (UC) problem. Although several approaches have been developed, a relevant survey has not been found to aid the understanding of convex hull pricing from the current limited literature. This paper provides a systematic survey of convex hull pricing. It reviews, compares, and links various existing approaches, focusing on the modeling and computation of convex hull prices. Furthermore, this paper explores potential areas of improvement and future challenges due to the ongoing efforts for power system decarbonization.https://www.mdpi.com/1996-1073/17/19/4851electricity marketsuplift paymentsconvex hull pricingsurveydecarbonization |
| spellingShingle | Farhan Hyder Bing Yan Mikhail Bragin Peter Luh Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions Energies electricity markets uplift payments convex hull pricing survey decarbonization |
| title | Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions |
| title_full | Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions |
| title_fullStr | Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions |
| title_full_unstemmed | Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions |
| title_short | Convex Hull Pricing for Unit Commitment: Survey, Insights, and Discussions |
| title_sort | convex hull pricing for unit commitment survey insights and discussions |
| topic | electricity markets uplift payments convex hull pricing survey decarbonization |
| url | https://www.mdpi.com/1996-1073/17/19/4851 |
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