Methodical Aspects of Pricing in the Heat Energy Markets under the Auction Approach
Authors:   Research Centre for Industrial Problems of Development of NAS of Ukraine, Kyzym Mykola O. , Khaustova Viktoriia Ye. ,   Research Centre for Industrial Problems of Development of NAS of Ukraine, Kotliarov Yevhen I. ,   Research Centre for Industrial Problems of Development of NAS of Ukraine, Salashenko Tetiana I. ,   Research Centre for Industrial Problems of Development of NAS of Ukraine
Published: June 2024

The development of competition in the heat energy markets with main heating networks is possible on the basis of the organization of unilateral heat auctions between heat producers. A prerequisite for opening competition in the heat energy markets is the separation of heat generation and heat networks, as well as the provision of regulated access to heat networks for independent producers. In terms of time segmentation, it is advisable to introduce: annual auctions, where basic heat needs are being contracted; monthly auctions – for peak needs, and daily auctions – for hourly imbalances. The article proposes organizational and technological regulations for conducting annual heat auctions, which should cover 80–90% of heat needs. Heat auctions should function according to the declared pricing method, where the producers who are the auction winners receive income for the contracted volumes of heat generation at a given price, while consumers pay a single weighted average price. Heat auctions operate under centralized dispatching, which provides for the coordination of physical and commercial heat energy flows, taking into account the technical specifics of heat networks. The article substantiates variants of economic and mathematical models of auction pricing in the heat energy market with different configurations of heat networks. As such a configuration, are considered heating networks with: 1) unlimited flow connections; 2) insulated heat producers; 3) system restrictions on throughput capacities within the heating area; 4) one-way and 5) two-way flows between adjacent heating areas. Establishment of a fair price for heat energy is reduced to solving the function of minimizing the weighted average price of heat energy for consumers under the following conditions: a) full satisfaction of consumer demand for thermal energy; b) technical capabilities of heat generation; c) connections and throughput capacities of heating networks within the heating area; d) directions of flows and capacity between adjacent heating areas. Each heat network represents a unique configuration of these conditions, therefore, the solution of the economic and mathematical problem of setting the auction price for heat energy will be different in each local heat market. Approbation of the proposed approach proves that with a large number of regulatory and systemic restrictions within the heating area, the price of thermal energy will increase, while bilateral flows of thermal energy between adjacent heating areas lead to a decrease in the price of thermal energy. The proposed methodological aspects of auction pricing for thermal energy should be introduced in large and medium-sized settlements with trunk networks, which will allow independent heat producers who work on renewable energy sources or have excess and waste heat to integrate into the market, contributing to the decarbonization of the city and the country as a whole.