We developed a two-step sequential optimisation framework to forecast electricity prices and dispatch outcomes. This approach mirrors how most grids think about dispatch, as it makes it possible to capture the effects of physical limitations such as minimum stable levels and expensive start up costs, as well as the varied bidding behaviour of generators.
Stage 1: Unit commitment
Unit commitment refers to the modelling of generator on/off decisions through binary variables that determine whether a generating unit is online or offline at any given settlement period.
In the model, a binary commitment variable is assigned to each thermal generating unit. Operational limits — specifically minimum and maximum generation levels — are conditional on this commitment status.
- When a unit is online, it must operate within its defined minimum stable output and maximum output levels
- When offline, a unit’s output is constrained to zero
This structure allows the model to capture key operational behaviours such as startup costs, minimum load requirements, and restricted flexibility.
Stage 2: Economic re-dispatch
Building on Stage 1, the second stage performs economic dispatch, incorporating both unit availability and economic bidding behaviour.
Units that are offline in the Unit Commitment are now excluded. Units that are online must remain on for a minimum number of running hours. To ensure this, they bid their minimum stable output level at the price floor, while their remaining capacity is priced into the market according to their bid price curve.
The model accounts for the bidding behaviour of each generator and cross-optimises interconnection, generation, and storage in order to meet demand.
We go into more detail of how each technology type is modelled in further sections.