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This content will become publicly available on November 1, 2026

Title: Optimal and Incentive-compatible Scheduling of Flexible Generation in an Electricity Market
There is a growing need for electricity-system flexibility to maintain real-time balance between energy supply and demand. In this paper, we explore optimal and incentive-compatible scheduling of generators for this purpose. Specifically, we examine a setting wherein each generator has a different operating cost if it is committed in advance (e.g., day- or hour-ahead) as opposed to being reserved as flexible real-time supply. We model an optimal division of generators between advanced commitment and real-time flexible reserves to minimize the expected cost of serving an uncertain demand. Next, we propose an incentive-compatible remuneration scheme with two key properties. First, the remuneration scheme incentivizes generators to reveal their true costs. Second, the scheme aligns generators’ incentives with the market operator’s optimal division of generators between advanced commitment and real-time reserve. We use a simple example to illustrate the market operator’s decision and the remuneration scheme. JEL Classification: C61, D47, D82, L94, Q4  more » « less
Award ID(s):
1029337 1548015 1808169 1922666
PAR ID:
10645605
Author(s) / Creator(s):
;
Publisher / Repository:
Sage Publishing
Date Published:
Journal Name:
The Energy Journal
Volume:
46
Issue:
6
ISSN:
0195-6574
Page Range / eLocation ID:
115 to 142
Format(s):
Medium: X
Sponsoring Org:
National Science Foundation
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