Unit commitment with dual variable constraints

A new unit commitment model is proposed for market economies with some form of indivisibilities (nonconvexities). Coordination in electricity pool auction markets with unit commitment is a conspicuous example. This presentation applies to a single-time period unit commitment with no network. The new formulation includes a market coordinator who collects the sale and purchase bids, and determines the optimal solution that balances the total generation with the forecast demand. A solution to the new commitment model is said to be optimal if it maximizes the (monetary) margin of every accepted production unit, while minimizing the sum of the margins of the unaccepted units that would achieve positive margins at the prevailing market price. The new unit commitment model produces a market price that is the system-wide marginal (bid) cost. Some preliminary results are reported, considering the single-period unit commitment problem, which provide some insights into the adequacy of the proposed approach as well as its economic implications as a tool for managing restructured energy systems.