Modeling of Decreasing Short-term Marginal Costs and Corresponding Supply Functions of Condensing Power Plants at a Day-Ahead Electricity Market

Abstract

The paper presents calculation and analysis of short-term marginal costs and corresponding supply functions of a condensing power plant. The calculation can be applied in power plant control systems or bidding support software to improve plant efficiency at the day-ahead market. A certain power turbine is considered. Mathematical modeling is applied to derive short-term marginal costs first and then the supply function of a price-taker from the energy unit performance characteristics. It is shown that the short-term marginal costs function of a unit can be decreasing or can have decreasing segments. In this case the supply function of a price-taker is not the same as the short-term marginal costs function. It is shown also that the supply function can be undefined for the output below the minimum safe output of the unit as well as within the range of decreasing short-term marginal costs. And the form of the supply function does not correspond with amount of units that the supplier runs.