Double-Sided Energy Auction in Microgrid: Equilibrium under Price Anticipation

Citation: Faqiry, M. N., & Das, S. (2016). Double-Sided Energy Auction in Microgrid: Equilibrium under Price Anticipation. Ieee Access, 4, 3794-3805. doi:10.1109/ACCESS.2016.2591912This paper investigates the problem of proportionally fair double-sided energy auction involving buying and selling agents. The grid is assumed to be operating under islanded mode. A distributed auction algorithm that can be implemented by an aggregator, as well as a possible approach by which the agents may approximate price anticipation is considered. Equilibrium conditions arising due to price anticipation is analyzed. A modified auction to mitigate the resulting loss in efficiency due to such behavior is suggested. This modified auction allows the aggregate social welfare of the agents to be arbitrarily close to that attainable with price taking agents. Next, equilibrium conditions when the aggregator collects a surcharge price per unit of energy traded is examined. A bi-objective optimization problem is identified that takes into account both the agents' social welfare as well as the aggregator's revenue from the surcharge. The results of extensive simulations, which corroborate the theoretical analysis, are reported. © 2013 IEEE

Markets for emission permits with free endowment: a vintage capital analysis

In this paper we develop a vintage capital model for a firm involved in a market for tradable emission permits. We analyze both the firm’s optimal investment plans and the market equilibrium. This allows us to scrutinize how firms use permits free endowment, and to highlight the implications of non-optimal uses both at the firm and at the market level. We provide a new rationale for the market of tradable permits not to be cost-efficient. The novel technical points in this context are the use a distributed (vintage) optimal control model of the firm, the use of optimality conditions for non-smooth problems, and the involvement of a nonlinear Fredholm integral equation of the first kind for the description of the equilibrium price of permits, and its practical meaning for market regularization.

Efficient double auction mechanisms in the energy grid with connected and islanded microgrids

Doctor of PhilosophyDepartment of Electrical and Computer EngineeringSanjoy DasThe future energy grid is expected to operate in a decentralized fashion as a network of autonomous microgrids that are coordinated by a Distribution System Operator (DSO), which should allocate energy to them in an efficient manner. Each microgrid operating in either islanded or grid-connected mode may be considered to manage its own resources. This can take place through auctions with individual units of the microgrid as the agents. This research proposes efficient auction mechanisms for the energy grid, with is-landed and connected microgrids. The microgrid level auction is carried out by means of an intermediate agent called an aggregator. The individual consumer and producer units are modeled as selfish agents. With the microgrid in islanded mode, two aggregator-level auction classes are analyzed: (i) price-heterogeneous, and (ii) price homogeneous. Under the price heterogeneity paradigm, this research extends earlier work on the well-known, single-sided Kelly mechanism to double auctions. As in Kelly auctions, the proposed algorithm implements the bidding without using any agent level private infor-mation (i.e. generation capacity and utility functions). The proposed auction is shown to be an efficient mechanism that maximizes the social welfare, i.e. the sum of the utilities of all the agents. Furthermore, the research considers the situation where a subset of agents act as a coalition to redistribute the allocated energy and price using any other specific fairness criterion. The price homogeneous double auction algorithm proposed in this research ad-dresses the problem of price-anticipation, where each agent tries to influence the equilibri-um price of energy by placing strategic bids. As a result of this behavior, the auction’s efficiency is lowered. This research proposes a novel approach that is implemented by the aggregator, called virtual bidding, where the efficiency can be asymptotically maximized, even in the presence of price anticipatory bidders. Next, an auction mechanism for the energy grid, with multiple connected mi-crogrids is considered. A globally efficient bi-level auction algorithm is proposed. At the upper-level, the algorithm takes into account physical grid constraints in allocating energy to the microgrids. It is implemented by the DSO as a linear objective quadratic constraint problem that allows price heterogeneity across the aggregators. In parallel, each aggrega-tor implements its own lower-level price homogeneous auction with virtual bidding. The research concludes with a preliminary study on extending the DSO level auc-tion to multi-period day-ahead scheduling. It takes into account storage units and conven-tional generators that are present in the grid by formulating the auction as a mixed inte-ger linear programming problem

Trust and Trustworthiness in Procurement Contracts with Retainage

When product quality is unverifiable by third parties, enforceable contracts that condition price upon quality are not feasible. If higher quality is also costly to deliver, moral hazard by sellers flourishes, particularly when procurement is via a competitive auction process. Retainage is a contractual mechanism that presents a solution to the third-party unverifiability problem, by setting aside a portion of the purchase price. After delivery, the buyer has sole discretion over the amount of retainage money that is released to the seller. While generally a feasible contract form to implement, retainage introduces a moral hazard for the buyer. We use laboratory experiments to investigate how and when retainage might be successfully used to facilitate trust and trustworthiness in procurement contracts. We observe that retainage induces a significant improvement in product quality when there are some trustworthy buyers in the population, consistent with a model of fair payment norms that we develop. This improvement is realized at the cost of increased buyer-seller profit inequalities. We also observe that at high levels of retainage, there is a welfare-decreasing market unraveling in which sellers do not bid on contracts. Our results imply that retainage incentives can mitigate the tension between competition and cooperation arising from reverse auctions, but only at appropriate levels of retainage

A Day Ahead Market Energy Auction for Distribution System Operation

In this paper, we study a day ahead double energy auction in a distribution system involving dispatchable generation units, renewable generation units supported by battery storage systems(BSSs), fixed loads, price responsive loads, and supply from the Whole Sale Market(WSM) at Locational Marginal Price(LMP). The auction is implemented within a Distribution System Operator (DSO) premises using Mixed Integer Linear Programming (MIP). The proposed auction is cleared at the Distribution LMP (DLMP) and is observed to be weakly budget balanced if no penalty is applied for DSO's deviation from originally committed supply from the WSM. Furthermore, the dynamics of LMP and DLMP, and their effect on distribution market participants scheduled quantities as well as the WSM supply to the distribution system is investigated.Comment: Electro Information Technology (EIT), 2017 IEEE International Conference o