Abstract
There is an intrinsic value in higher integration of multi-carrier energy systems (especially gas and electricity), to increase operational flexibility in the electricity system and to improve allocation of resources in gas and electricity networks. The integration of different energy carrier markets is challenging due to the existence of physical and economic dependencies between the different energy carriers. We propose in this paper an integrated day-ahead multi-carrier gas, electricity and heat market clearing which includes new types of orders and constraints on these orders to represent techno-economic constraints of con-version and storage technologies. We prove that the proposed market clearing gives rise to competitive equilibria. In addition, we propose two decentralised clearing algorithms which differ in how the decomposition of the underlying centralised clearing optimisation problem is performed. This has implications in terms of the involved agents and their mutual information exchange. It is proven that they yield solutions equivalent to the centralised market clearing under a mild assumption of sufficient number of iterations. We argue that such an integrated multi-carrier energy market mitigates (spot) market risks faced by market participants and enables better spot pricing of the different energy carriers. The results show that conversion/storage technology owners would suffer from losses and/or opportunity costs, if they were obliged to only use elementary orders. For the test cases considered in this article, sum of losses and opportunity costs could reach up to 13,000 €/day and 9,000 €/day respectively, compared with the case where conversion and storage orders are used.
Highlights
We argue that such an integrated multi-carrier energy market mitigates market risks faced by market participants and enables better spot pricing of the different energy carriers
We provide answers to the following questions, which to the best of our knowledge have not been yet addressed in the literature: (i) what are the market order types and constraints that allow for economically efficient sector coupling as defined above4? (ii) How should a market clearing mechanism with such order types and constraints look like and what are the economical and practical implications of calculating the market outcome in a centralised or decentralised manner?
Conversion orders we focus on the novel conversion order type, which creates a tool for market participants to mitigate the risks related to the price forecasts of different carriers, and a mean to couple the markets of different carriers
Summary
Climate change and the subsequent environmental and societal impacts such as sea level rise, extreme weather events (e.g., severe storms and heat waves) [1] have led scientific and regulatory communities to seek solutions for cutting greenhouse gas emissions to net-zero [2,3]. Jiang et al [31] propose a multi-period programming to study ‘‘marginal price based bilateral energy trading on the equilibrium of coupled natural gas and electricity distribution markets". The above cited literature [22] - [34] investigates the linkages and the associated impacts that exist between the energy systems of heat, natural gas and electricity (power) and to a certain extent study different levels of market-based coordination between the associated carriers. This paper proposes market models where electricity, heat and gas markets are co-optimised and where the cooptimisation leverages new bidding products such as conversion orders and associated constraints that the market participants can introduce to better represent their techno-economic constraints. The market models introduced aim at removing economic inefficiencies due to the lack of market-based coordination
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