Start Me Up Modeling of Power Plant Start-Up Conditions and Their Impact on Prices

Electricity Markets Working Paper No. WP-EM-28

16 Pages Posted: 9 Jul 2008 Last revised: 16 Jul 2008

See all articles by Jan Abrell

Jan Abrell

ETH Zürich - Centre for Energy Policy and Economics (CEPE)

Friedrich Kunz

German Institute for Economic Research (DIW Berlin)

Hannes Weigt

WWZ, Wirtschaftswissenschaftliche Fakultät der Universität Basel

Date Written: July 8, 2008

Abstract

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.

Keywords: electricity, unit commitment, start-up costs, linear programming, mixed integer programming

JEL Classification: L94, L51, D61

Suggested Citation

Abrell, Jan and Kunz, Friedrich and Weigt, Hannes, Start Me Up Modeling of Power Plant Start-Up Conditions and Their Impact on Prices (July 8, 2008). Electricity Markets Working Paper No. WP-EM-28. Available at SSRN: https://ssrn.com/abstract=1156922 or http://dx.doi.org/10.2139/ssrn.1156922

Jan Abrell

ETH Zürich - Centre for Energy Policy and Economics (CEPE) ( email )

8092 Zurich
Switzerland

Friedrich Kunz

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Hannes Weigt (Contact Author)

WWZ, Wirtschaftswissenschaftliche Fakultät der Universität Basel ( email )

Basel, 4051
Switzerland

HOME PAGE: http://fonew.unibas.ch/

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