Trading hubs construction in electricity markets using evolutionary algorithms

Abstract

Abstract. The trading hubs construction problem for electricity markets under locational marginal prices is considered. Given historical prices for all nodes of the electricity grid and for all market participants over a sufficiently long period of time, the problem is to choose a required number of node clusters (hubs) and to assign market participants to hubs so as to minimize the deviation of hub prices from the prices of participants under certain constraints.In view of problem complexity, two evolutionary algorithms are proposed: a genetic algorithm and a hybrid local search heuristic. It is proved that the proposed genetic algorithm converges to optimum almost surely. The algorithms are tested and compared on the real-life data. The structure of the fitness landscapes is analyzed using multiple restarts of the local search and the behavior of the evolutionary algorithms is explained on the basis of this analysis.

Hitting times of local and global optima in genetic algorithms with very high selection pressure

“…In the theoretical analysis of GAs it is often assumed that the algorithm constructs an infinite sequence of populations and the termination condition is never met. In practice, the termination condition is required not only to stop the search and output the result, but also to perform multiple restarts of the GA with random initialization [5,8]. Multiple independent runs of randomized algorithms or local search (multistart) are widely used to prevent localization of the search in the "unpromising" areas of the search space (see e.g.…”

On Finding Maximum Cardinality Subset of Vectors with a Constraint on Normalized Squared Length of Vectors Sum

“…Another problem related to the MCSV is the trading hubs construction problem, emerging in electricity markets under locational marginal pricing [2,3,4]. A trading hub is a subset of nodes of the electricity greed that may be used to calculate a price index as an average nodal price over the hub nodes.…”