Network and Temporal Effects on Strategic Bidding in Electricity Markets
Network and Temporal Effects on Strategic Bidding in Electricity Markets

Author: Youfei Liu

Publisher: Open Dissertation Press

Published: 2017-01-27

Total Pages:

ISBN-13: 9781361470275

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This dissertation, "Network and Temporal Effects on Strategic Bidding in Electricity Markets" by Youfei, Liu, 劉有飛, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: of thesis entitled "Network And Temporal Effects On Strategic Bidding In Electricity Markets" Submitted by Youfei Liu for the Degree of Doctor of Philosophy at the University of Hong Kong in February 2006 The global deregulation of power industries has given rise to many fascinating research topics. This thesis addresses issues of strategic bidding by power generators. The problem of strategic bidding is to optimize an individual power generation bid by maximizing profits, based on production cost, expectation of rival behavior and system demand. Electrical power flow over different links is governed by the physical law (Kirchhoff law). As a result, electrical power flow cannot be independently determined and the electricity transmission system has global network effects. One major contribution of this study is to investigate the network effects of electricity transmission on strategic bidding and analyze the network-constrained electricity market equilibria. A three-node electricity system is used for investigation. The decision space of generators is divided into the congestion-on region and congestion-off region, and the optimal response curves of generators in each region are then derived. The market equilibrium is located as the intersection of these optimal response curves. It is analytically shown that this may consist either of a unique unconstrained market equilibrium, a unique constrained market equilibrium, multiple-equilibria, or no pure Nash equilibrium. Subsequently, the interaction between transmission rights holding and market power exercising is addressed. It is shown that in the situation with a positive PTDF, holding transmission rights mitigate market power, and produce an improvement in market efficiency, while in other situations, the reverse is true. Furthermore it is demonstrated that a possible allocation of transmission rights to generators can be found to achieve maximum efficiency. Another unique characteristic of electricity markets is their notable temporal ii effects. In other words, electricity prices have significant volatilities because of the non-storability of power energy and the large variations of system demand. The second part of this study investigates the temporal effects of the electricity market on strategic bidding. A periodic dynamic feedback system is proposed to model the generation competition process. With the developed system dynamics, an optimal control problem is formulated to study the multi-period optimization behavior (called the 'advanced' strategy) of a generator, and the state-feedback control rule is then derived via a sweeping method. It is demonstrated that the generator with optimal control can obtain more profits, and a sensitivity analysis is provided to locate the market factors that affect the performance of optimal control. Next, system uncertainties are included, and a stochastic optimal control problem for generation decision is formulated and solved. Two interesting problems are investigated, namely the effect of the generator's 'advanced' strategic behavior on market efficiency, and the way in which an individual's payoff evolves with other generators' 'advanced' strategic behavior. It is shown that the 'advanced' strategic behavior of generators will improve market efficiency, while an individual's payoff evolution resembles a 'Prisoner Dilemma'. An analysis of risk management of generation decisi...

Handbook of Networks in Power Systems I
Handbook of Networks in Power Systems I

Author: Alexey Sorokin

Publisher: Springer Science & Business Media

Published: 2012-02-29

Total Pages: 588

ISBN-13: 3642231934

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Energy has been an inevitable component of human lives for decades. Recent rapid developments in the area require analyzing energy systems not as independent components but rather as connected interdependent networks. The Handbook of Networks in Power Systems includes the state-of-the-art developments that occurred in the power systems networks, in particular gas, electricity, liquid fuels, freight networks, as well as their interactions. The book is separated into two volumes with three sections, where one scientific paper or more are included to cover most important areas of networks in power systems. The first volume covers topics arising in electricity network, in particular electricity markets, smart grid, network expansion, as well as risk management. The second volume presents problems arising in gas networks; such as scheduling and planning of natural gas systems, pricing, as well as optimal location of gas supply units. In addition, the second volume covers the topics of interactions between energy networks. Each subject is identified following the activity on the domain and the recognition of each subject as an area of research. The scientific papers are authored by world specialists on the domain and present either state-of-the-arts reviews or scientific developments.

Understanding Strategic Bidding in Restructured Electricity Markets
Understanding Strategic Bidding in Restructured Electricity Markets

Author: Ali Hortaçsu

Publisher:

Published: 2005

Total Pages: 50

ISBN-13:

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We examine the bidding behavior of firms competing on ERCOT, the hourly electricity balancing market in Texas. We characterize an equilibrium model of bidding into this uniform-price divisible-good auction market. Using detailed firm-level data on bids and marginal costs of generation, we find that firms with large stakes in the market performed close to theoretical benchmarks of static, profit-maximizing bidding derived from our model. However, several smaller firms utilized excessively steep bid schedules that deviated significantly from our theoretical benchmarks, in a manner that could not be empirically accounted for by the presence of technological adjustment costs, transmission constraints, or collusive behavior. Our results suggest that payoff scale matters in firms' willingness and ability to participate in complex, strategic market environments. Finally, although smaller firms moved closer to theoretical bidding benchmarks over time, their bidding patterns contributed to productive inefficiency in this newly restructured market, along with efficiency losses due to the close-to optimal exercise of market power by larger firms.

Valuation, Hedging and Speculation in Competitive Electricity Markets
Valuation, Hedging and Speculation in Competitive Electricity Markets

Author: Petter L. Skantze

Publisher: Springer Science & Business Media

Published: 2001-10-31

Total Pages: 240

ISBN-13: 9780792375289

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The challenges facing participants in competitive electricity markets are staggering: high price volatility introduces significant financial risk into an industry accustomed to guaranteed rates of return, while illiquid forward markets prevent effective hedging strategies from being implemented. Valuation, Hedging and Speculation in Competitive Electricity Markets: A Fundamental Approach , examines the unique properties which separate electricity from other traded commodities, including the lack of economical storage, and the impact of a scarce transmission network. The authors trace the sources of uncertainties in the price of electricity to underlying physical and economic processes, and incorporate these into a bid-based model for electricity spot and forward prices. They also illustrate how insufficient market data can be circumvented by using a combination of price and load data in the marking- to-market process. The model is applied to three classes of problems central to the operation of any electric utility or power marketer; valuing generation assets, formulating dynamic hedging strategies for load serving obligations, and pricing transmission contracts and locational spread options. Emphasis is placed on the difference between trades which can be 'booked out' in the forward markets, and those which must be carried through to delivery. Lately, significant attention has been given to the role of regulators in mitigating excessive price levels in electricity markets. The authors conduct a quantitative analysis of the long-term effects of regulatory intervention through the use of price caps. By modeling the dynamic interplay between the observed price levels and the decision to invest in new generation assets, it is shown how such short term fixes can lead to long term deficits in the available generation capacity, and ultimately to market failures and blackouts.

Local Electricity Markets
Local Electricity Markets

Author: Tiago Pinto

Publisher: Academic Press

Published: 2021-07-03

Total Pages: 474

ISBN-13: 0128226668

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Local Electricity Markets introduces the fundamental characteristics, needs, and constraints shaping the design and implementation of local electricity markets. It addresses current proposed local market models and lessons from their limited practical implementation. The work discusses relevant decision and informatics tools considered important in the implementation of local electricity markets. It also includes a review on management and trading platforms, including commercially available tools. Aspects of local electricity market infrastructure are identified and discussed, including physical and software infrastructure. It discusses the current regulatory frameworks available for local electricity market development internationally. The work concludes with a discussion of barriers and opportunities for local electricity markets in the future. Delineates key components shaping the design and implementation of local electricity market structure Provides a coherent view on the enabling infrastructures and technologies that underpin local market expansion Explores the current regulatory environment for local electricity markets drawn from a global panel of contributors Exposes future paths toward widespread implementation of local electricity markets using an empirical review of barriers and opportunities Reviews relevant local electricity market case studies, pilots and demonstrators already deployed and under implementation

Competitive Electricity Markets
Competitive Electricity Markets

Author: Fereidoon Sioshansi

Publisher: Elsevier

Published: 2011-10-10

Total Pages: 625

ISBN-13: 0080557716

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After 2 decades, policymakers and regulators agree that electricity market reform, liberalization and privatization remains partly art. Moreover, the international experience suggests that in nearly all cases, initial market reform leads to unintended consequences or introduces new risks, which must be addressed in subsequent “reform of the reforms. Competitive Electricity Markets describes the evolution of the market reform process including a number of challenging issues such as infrastructure investment, resource adequacy, capacity and demand participation, market power, distributed generation, renewable energy and global climate change. Sequel to Electricity Market Reform: An International Perspective in the same series published in 2006 Contributions from renowned scholars and practitioners on significant electricity market design and implementation issues Covers timely topics on the evolution of electricity market liberalization worldwide

From Regulation to Competition: New frontiers in electricity markets
From Regulation to Competition: New frontiers in electricity markets

Author: Michael A. Einhorn

Publisher: Springer Science & Business Media

Published: 2012-12-06

Total Pages: 286

ISBN-13: 9401113688

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Electric utilities throughout the world continue to face new challenges involving ownership, market structure, and regulation. There are three related issues at hand. First, should ownership be private or public? Second, what operations should be integrated and where is competition feasible? Third, where is regulation necessary and can it be made more efficient? This volume bears directly upon these concerns. The book contains two sections. The first six articles discuss the British electricity experiment that has privatized and disintegrated the nation's generation, transmission, and distribution companies, introduced market competition for power purchases, and implemented incentive regulation for monopolized transmission and distribution grids. The remaining articles focus on the theater in which significant microeconomic issues will continue to emerge, most immediately in the U.K. and U.S.A. -- the coordination and pricing of transmission.