EURO Award for Martin Bichler and Team
Research, Awards |
With the “EURO Award for the Best EJOR Paper”, the Association of European Operational Research Societies (EURO) recognizes outstanding research published in the European Journal of Operational Research (EJOR). Mete Şeref Ahunbay, Martin Bichler, Teodora Dobos and Johannes Knörr from the Chair of Decision Sciences and Systems at the Technical University of Munich received the award for their paper “Solving large-scale electricity market pricing problems in polynomial time.”
Challenges in Price Formation on Wholesale Electricity Markets
In centralized wholesale electricity markets, market operators use non-convex optimization models to balance electricity supply and demand. Market prices are typically determined based on the dual variables of convex relaxations of these optimization problems. As a result of these relaxations, market operators often have to make additional compensation payments to individual market participants. This can lead to significant costs, which regulatory authorities also view critically.
New Markup Mechanism Reduces Compensation Payments
This award-winning work develops a so-called markup mechanism for spot electricity markets. The method computes a solution that nearly maximizes welfare in polynomial time. Although it requires a moderate price premium on the demand side, it largely avoids balancing payments. The experimental results show that the new method is significantly faster than established approaches for large, real-world problem sizes, while causing only minor welfare losses.
High Praise for the Research Team
“This award means a great deal to us,” explains Martin Bichler, holder of the Chair of Decision Sciences and Systems. “It recognizes a collaborative research effort in which we were able to combine new theoretical insights with an application relevant to real-world electricity markets.” He is particularly pleased to receive the award together with Mete Şeref Ahunbay, Teodora Dobos and Johannes Knörr. “The fact that our work was selected from among 250 submissions in the ‘Innovative Applications of Operational Research’ category is a great honor for the entire team,” says Martin Bichler.