Market Power in Electricity Price Bidding Strategy

摘要

In a perfect electricity market, any power supplier is a price taker. Microeconomic theory holds the optimal bidding strategy for supplier is simply to bid marginal cost. When a generator bids other than marginal cost, in an effort to exploit imperfections in the market to increase profits, this behavior is called strategic bidding. If the generator can successfully increase its profits by strategic bidding or by any means other than lowering its cost, it is said to have market power. The new electricity markets are certainly not perfectly competitive, and as a result, a supplier can increase profits through strategic bidding, or in other words, through exercising market power. The goal of this study is to model an agent driven bilateral power market auction where some of the players attempt to benefit from using market power, which will be introduced in details later. This paper describes a simple experiment, where a network consisting of six generators in three zones and two loads connected by a six bus network is constructed to stimulate mini-market, illustrates how malicious agents can affect the price and network congestion, and then presents the results of that experiment, and finally makes the conclusion.