Global Optimization of Multilevel Electricity Market Models Including Network Design and Graph Partitioning

Submission Status:under review
  • We consider the combination of a network design and graph partitioning model in a multilevel framework for determining the optimal design of zonal pricing electricity markets. This together with nonlinearities due to economic modeling yields extremely challenging mixed-integer nonlinear multilevel models for which we develop two problem-tailored solution techniques. The first approach relies on an equivalent bilevel formulation and a standard KKT transformation thereof, whereas the second is a tailored generalized Benders decomposition. We prove for both methods that they yield global optimal solutions. Finally, we compare the approaches in a numerical study and show that the tailored Benders approach clearly outperforms the standard KKT transformation.

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Author:Thomas Kleinert, Martin Schmidt
Document Type:Preprint
Date of Publication (online):2018/02/07
Date of first Publication:2018/02/07
Release Date:2018/02/07
Tag:Electricity market design; Graph partitioning; Mixed-integer optimization; Multilevel optimization; Network design
Institutes:Friedrich-Alexander-Universität Erlangen-Nürnberg