An Incentive-Compatible Energy Pricing Mechanism for Electricity-Gas Interconnected System Using Vickrey-Clarke-Groves Mechanism Design Theory

Locational Marginal Pricing (LMP) has been proven in theory and practice that it is difficult to simultaneously achieve the requirements of minimizing market clearing costs, individual rationality, and incentive compatibility for day-ahead market energy pricing mechanism. Considering the asymmetry of information among market members, in order to overcome the strategic bidding behaviors of generation units and natural gas wells under LMP energy pricing mechanism, to achieve the market clearing cost minimization and efficient day-ahead market operation, this paper proposes an incentive-compatible market energy pricing mechanism for electricity-gas interconnected system based on Vickrey-Clarke-Groves (VCG) mechanism design theory. Firstly, this paper builds a day-ahead market clearing model for the electricity-gas interconnected system. Secondly, propose VCG mechanism design theory. Thirdly, it is proved that the energy pricing mechanism presented have the characteristics of minimization of market clearing costs, incentive compatibility and individual rationality. Finally, the basic characteristics of the proposed energy pricing mechanism are demonstrated and verified by the simulation results of a revised IEEE 14-node electric power and 9-node natural gas combined system.