Energy Pricing Mechanism Considering Energy Converter Devices as Components of Pan-Energy Transmission System

Price plays a vital role in developing well-functioning multi-carrier systems. Conventional single energy markets set prices for each specific type of energy carrier. Their prices are correlated due to energy converter devices, but the relations are obscure. In the unified energy market (UEM), a more efficient and sufficient pricing mechanism can be achieved with energy converter devices as components of the pan-energy transmission system. Thus, we create a unified market framework for multi-energy systems, including gas system, heat system and electricity system. Take the integrated gas and power system, for example. We analytically derived the interrelation between natural gas prices and electricity prices based on locational marginal price (LMP) theory. And the energy conversion capacity constraints binding will result in LMPs diversity. As a result, a new market-clearing model for the unified market of electricity and gas is proposed, where gas-fired generators are no longer electricity production competitors but the energy transmission service provider. Numerical results verify the quantitative relations between clearing prices of gas and electricity, and how energy conversion capacity binding impact the price relationships. It also demonstrates that the proposed method can increase social welfare and improve market dispatch efficiency.

Automated summary

This study establishes a unified market framework for multi-energy systems, and analyzes the interrelation between natural gas and electricity prices. A new market-clearing model is proposed, which demonstrates the quantitative relations between the two and how it can improve social welfare and market dispatch efficiency.