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

Thomas Kleinert (thomas.kleinert***at***fau.de)
Martin Schmidt (mar.schmidt***at***fau.de)

Abstract: 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.

Keywords: Network design, Graph partitioning, Multilevel optimization, Mixed-integer optimization, Electricity market design

Category 1: Integer Programming ((Mixed) Integer Nonlinear Programming )

Category 2: Global Optimization

Category 3: Applications -- OR and Management Sciences


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Entry Submitted: 02/07/2018
Entry Accepted: 02/07/2018
Entry Last Modified: 02/26/2018

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