Solving a nodal spot market with voltage value functions using a hybrid optimization algorithm

The problem of managing voltage quality in a nodal spot market can be commercialized by incorporating a voltage value function (VVF) in each bid or offer function. The VVF allows market participants to specify the value they place on voltage quality by specifying their preferred voltage magnitude and tolerance parameters. From an economic perspective, this approach internalizes voltage management into a nodal spot market. It requires the use of a full AC network model. However, the resulting optimization problem might become non-convex and an optimization algorithm based on a gradient search method may not find the optimal solution. In this paper, we apply a hybrid optimization method that combines a probabilistic approach with deterministic optimization to improve the rate of market convergence and permit greater flexibility in the choice of voltage value function.