6,044 research outputs found
Understanding Strategic Bidding in Restructured Electricity Markets: A Case Study of ERCOT
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.
Wind generator behaviour in a pay-as-bid curtailment market
A pay-as-bid curtailment market, where Wind Power Plants (WPPs) may offer prices to have their output reduced in the event of network balancing or stability constraints, is one approach towards the market integration of a high proportion of wind energy onto a power system. Such a market aims to procure curtailment at a cost close to the marginal value of the electricity plus renewable subsidies and incentives, reducing risks for WPPs while minimising costs to the Independent System Operator (ISO). Through the use of game theory and market modelling, a key set of bidding strategies are identified that may evolve within such a market, which may act in opposition to the goals of the ISO. These are applied to a variety of network conditions in order to determine their likely impact and the resulting bidding signals provided to market participants. Bidding behaviours and market fluidity may also be affected by factors particular to wind power plants. Through analysis of both ex ante and ex post case studies, the existence of these behaviours is demonstrated, illustrating that a pay-as-bid curtailment market may not be efficient at price discovery in practice
Designing Coalition-Proof Reverse Auctions over Continuous Goods
This paper investigates reverse auctions that involve continuous values of
different types of goods, general nonconvex constraints, and second stage
costs. We seek to design the payment rules and conditions under which
coalitions of participants cannot influence the auction outcome in order to
obtain higher collective utility. Under the incentive-compatible
Vickrey-Clarke-Groves mechanism, we show that coalition-proof outcomes are
achieved if the submitted bids are convex and the constraint sets are of a
polymatroid-type. These conditions, however, do not capture the complexity of
the general class of reverse auctions under consideration. By relaxing the
property of incentive-compatibility, we investigate further payment rules that
are coalition-proof without any extra conditions on the submitted bids and the
constraint sets. Since calculating the payments directly for these mechanisms
is computationally difficult for auctions involving many participants, we
present two computationally efficient methods. Our results are verified with
several case studies based on electricity market data
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