Robust payment cost minimization in electricity markets

Marginal pricing schemes have become the industry's de-facto standard for electrical energy trades. For market clearing, offer cost minimization mechanisms have been used since production offers matching producers' actual cost leads to maximum social welfare. However, this condition never holds in practice. Therefore, price-based electricity markets are drawing much more attention within the marginal pricing paradigm. Among such clearing mechanisms, the payment cost minimization (PCM) mechanism is envisaged to be a good solution for the aforementioned issue. On the other hand, power systems are stochastic in nature. The optimal solution to the unit commitment problem should take into account the system uncertainties. The inherent computational burden of applying the PCM mechanism motivates the application of effective uncertainty-handling techniques. In this paper, to reduce such computational complexity, a robust optimization technique is proposed to find the market-clearing strategy which minimizes consumer payment, is feasible, and is resilient against the variations of uncertain parameters. The case studies results show the proposed approach's effectiveness in terms of optimality and speed.