Unit commitment for combined pool/bilateral markets with emissions trading

The paper proposes a unit commitment problem formulation which models combined pool/bilateral operation as well as effects of emissions constraints and emissions trading mechanisms. In here proposed model, power outputs of generators are, on one hand, bounded by their bilateral contract commitments, and on the other side, by the amount of CO2 emissions that they are allowed to produce over time. These emissions constraints introduce additional complexity as it is becoming more important for generating units to decide on when and how much to produce, as well as to investigate how to mange their allocated CO2 permissions in the most economic way. Since the proposed formulation of the market clearing includes costs of buying and selling of CO2 allowances, it permits analysis on how emission caps and emission market prices can influence generation decisions and the resulting generation scheduling. The method is illustrated on a 5-unit system, and given examples investigate how different levels of bilateral trades, as well as amounts of CO2 allowances, may affect the market outcome.