A novel incentive-based demand response model for Cournot competition in electricity markets

This paper presents an analysis of competition between generators when incentive-based demand response is employed in an electricity market. Thermal and hydropower generation are considered in the model. A smooth inverse demand function is designed using a sigmoid and two linear functions for modeling the consumer preferences under incentive-based demand response program. Generators compete to sell energy bilaterally to consumers and system operator provides transmission and arbitrage services. The profit of each agent is posed as an optimization problem, then the competition result is found by solving simultaneously Karush-Kuhn-Tucker conditions for all generators. A Nash-Cournot equilibrium is found when the system operates normally and at peak demand times when DR is required. Under this model, results show that DR diminishes the energy consumption at peak periods, shifts the power requirement to off-peak times and improves the net consumer surplus due to incentives received for participating in DR program. However, the generators decrease their profit due to the reduction of traded energy and market prices

Electricity Transmission Pricing and Performance-Based Regulation

Performance-based regulation (PBR) is influenced by the Bayesian and non-Bayesian incentive mechanisms. While Bayesian incentives are impractical, the insights from their properties can be combined with practical non-Bayesian mechanisms for application to transmission pricing. This combination suggests an approach based on the distinction between ultra-short, short and long periods. Ultra-short periods are marked by real-time pricing of point-to-point transmission services. Pricing in short periods involves fixed fees and adjustments via price-cap formulas or profit sharing. Productivity-enhancing incentives have to be tempered by long-term commitment considerations, so that profit sharing may dominate pure price caps. Investment incentives require long-term adjustments based on rate-of-return regulation with a “used and useful” criterion.

A survey of simulation techniques in commerce and defence

Despite the developments in Modelling and Simulation (M&S) tools and techniques over the past years, there has been a gap in the M&S research and practice in healthcare on developing a toolkit to assist the modellers and simulation practitioners with selecting an appropriate set of techniques. This study is a preliminary step towards this goal. This paper presents some results from a systematic literature survey on applications of M&S in the commerce and defence domains that could inspire some improvements in the healthcare. Interim results show that in the commercial sector Discrete-Event Simulation (DES) has been the most widely used technique with System Dynamics (SD) in second place. However in the defence sector, SD has gained relatively more attention. SD has been found quite useful for qualitative and soft factors analysis. From both the surveys it becomes clear that there is a growing trend towards using hybrid M&S approaches

The illusions of competition in the water sector: a response to the OFWAT/Cave consultations on introducing competition in the water sector in England and Wales

The paper provides a critical review of the role of liberalisation and competition in the water sector, based on empirical evidence from the UK and internationally. The paper is submitted as evidence to the official reviews of competition in water sector in England and Wales

Market Power Assessment and Mitigation in Hydrothermal Systems

The objective of this work is to investigate market power issues in bid- based hydrothermal scheduling. Initially, market power is simulated with a single stage Nash-Cournot equilibrium model. Market power assessment for multiple stages is then carried through a stochastic dynamic programming scheme. The decision in each stage and state is the equilibrium of a multi-agent game. Thereafter, mitigation measures, specially bilateral contracts, are investigated. Case studies with data taken from the Brazilian system are presented and discussed.Game theory, Hydroelectric-thermal power generation, Power generation economics

Exploring computational power markets with evolutionary algorithms

The recent deregulation of the electric industry in the United States opened some sectors of the power market to competition. This work addresses a computational restructured wholesale electricity market. The goal of the study is to model agent driven bilateral power market auctions where the players are represented by autonomous intelligent agents. Different aspects of the market are considered. Some of them are studies on structural and strategic market power of buyers and sellers varies with changes in relative concentration and relative capacity. Others are cases where players attempt to benefit from causing instabilities like brownouts and blackouts, as well as economic instabilities by applying different gaming strategies. Agents are modeled using various evolutionary programming techniques, such as reinforced learning, genetic algorithms and genetic programming. The results suggest that some of the solutions are suitable for robust industrial applications

A Survey of Agent-Based Modeling Practices (January 1998 to July 2008)

In the 1990s, Agent-Based Modeling (ABM) began gaining popularity and represents a departure from the more classical simulation approaches. This departure, its recent development and its increasing application by non-traditional simulation disciplines indicates the need to continuously assess the current state of ABM and identify opportunities for improvement. To begin to satisfy this need, we surveyed and collected data from 279 articles from 92 unique publication outlets in which the authors had constructed and analyzed an agent-based model. From this large data set we establish the current practice of ABM in terms of year of publication, field of study, simulation software used, purpose of the simulation, acceptable validation criteria, validation techniques and complete description of the simulation. Based on the current practice we discuss six improvements needed to advance ABM as an analysis tool. These improvements include the development of ABM specific tools that are independent of software, the development of ABM as an independent discipline with a common language that extends across domains, the establishment of expectations for ABM that match their intended purposes, the requirement of complete descriptions of the simulation so others can independently replicate the results, the requirement that all models be completely validated and the development and application of statistical and non-statistical validation techniques specifically for ABM.Agent-Based Modeling, Survey, Current Practices, Simulation Validation, Simulation Purpose

Gas models and three difficult objectives

Competition, security of supply and sustainability are at the core of EU energy policy. The Commission argues that making the European gas market more competitive (completing the internal gas market) will be instrumental in the pursuit of these objectives. We examine the question through the eyes of existing models of the European gas market. Can model tell us anything on this problem? Do they confirm or infirm the analysis of the Commission appearing in fundamental documents such the Green Paper, the Sector Inquiry or the new legislation package? We argue that results of existing models contradict a fundamental finding (paragraph 77) of the Sector Inquiry. We further elaborate on the basis of the economic assumption underlying the models, that changing the assumptions implicitly contained in paragraph 77 cast doubts on a large part of the reasoning justifying the completion of the internal gas market. We also explain that models could help arriving at a better definition of the relevant market, which is so important in the reasoning of the Commission. Last we also find model results that question the effectiveness of ownership unbundling. As to security of supply, we explain that models can also contribute to assess the value of additional infrastructure in the context of security of supply, but this potential seems largely untapped. Last we note that sustainability has not yet penetrated models of gas markets. We conclude by suggesting other area of immediate concern, possibly of higher technical difficulty, that modellers could address in future research.