Start Me Up Modeling of Power Plant Start-Up Conditions and Their Impact on Prices
TU Dresden - Faculty of Business and Economics, Chair of Energy Economics and Public Sector Management
German Institute for Economic Research (DIW Berlin)
WWZ, Wirtschaftswissenschaftliche Fakultät der Universität Basel
July 8, 2008
Electricity Markets Working Paper No. WP-EM-28
In this paper we compare different approaches to account for start-up costs when modeling electricity markets. We restrict the model formulation to either linear or mixed integer problems in order to guarantee a robust solution. The results indicate that the choice of the model has a significant impact on the resulting market prices and company profit. The models either calculate higher peak prices or prices below marginal costs in off-peak periods but not both. Furthermore, the models perform differently when we apply a large sample, the number of equations having an important impact. We conclude that different model formulations respond particularly to specific modeling questions.
Number of Pages in PDF File: 16
Keywords: electricity, unit commitment, start-up costs, linear programming, mixed integer programming
JEL Classification: L94, L51, D61working papers series
Date posted: July 9, 2008 ; Last revised: July 16, 2008
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