ELECTRICITY PRICE WITH CONSIDERATION OF STARTUP AND SHUTDOWN COSTS OF GENERATING UNITS IN ELECTRICITY MARKETS

Đỗ Minh Hồng; Lê Việt Tiến; Phạm Năng Văn; Nguyễn Thái Minh

doi:10.34238/tnu-jst.12694

ELECTRICITY PRICE WITH CONSIDERATION OF STARTUP AND SHUTDOWN COSTS OF GENERATING UNITS IN ELECTRICITY MARKETS

About this article

Received: 28/04/25 Revised: 20/08/25 Published: 20/08/25

Authors

1. Do Minh Hong, School of Electrical and Electronic Engineering - Hanoi University of Science and Technology
2. Le Viet Tien, School of Electrical and Electronic Engineering - Hanoi University of Science and Technology
3. Pham Nang Van , School of Electrical and Electronic Engineering - Hanoi University of Science and Technology
4. Nguyen Thai Minh, National Power System and Market Operator Company (NSMO)

Abstract

The day-ahead unit commitment problem plays a critical role in power system operation. However, the non-convex characteristic of this problem complicates electricity price determination. The traditional method often ignores start-up and shutdown costs, leading to potential negative profit for the producer, which risks market exit. This study proposes a novel pricing mechanism incorporating start-up and shutdown costs, ensuring non-negative profit for each producer. The proposed model is formulated as linearly constrained programming with integer variables, and the obtained solution is globally optimal. Calculation results are conducted on the IEEE 8-bus test system to demonstrate the effectiveness of the proposed method. The GAMS programming language with the CPLEX commercial optimizer is employed for computations. Results from the proposed method are compared with those of the traditional pricing approach. Numerical results show that the proposed pricing mechanism eliminates the negative profit for the producer. Consequently, the proposed pricing method outperforms the traditional pricing method regarding economic efficiency. The pricing method proposed in this study assists policymakers in developing appropriate payment mechanisms for power plants, ensuring fair and efficient markets.

Keywords

Electricity markets; Day-ahead unit commitment; Locational marginal pricing; Revenue adequacy; Linear programming with integer variables

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DOI: https://doi.org/10.34238/tnu-jst.12694

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