Determining the Interruptible Load with Strategic Behavior in a Competitive Electricity Market

While variable renewable energy (VRE) has been developed for decades, VRE market participation is developing relatively slowly, despite the potential economic efficiency it may bring. This paper tries to specify the efficiency of VRE in a deregulated pool-based electricity market. Based on standard pool-based market design, this paper built a direct current optimal power flow (DC-OPF) based simplified 2-settlement spot electricity market model conjugating electricity and ancillary service clearing. To address the outcomes of the imperfect market in the real world, this paper studied the consequences brought by agents’ learning and strategic behaviors. Simulations under different ancillary service levels and reliability cost levels are carried out. The results show that VRE may be unprofitable in the market, especially when learning and strategic behavior is considered. Learning and strategic market behavior will also hamper the role of VRE as a “better” energy source. This paper shows and proves a locational marginal price (LMP) disadvantage phenomenon, which will lead to low profitability of VRE. Three major suggestions are given based on the results.

Download Full-text

Modeling the strategic behavior of the iberian electricity market producers using time series analysis

2013 10th International Conference on the European Energy Market (EEM) ◽

10.1109/eem.2013.6607310 ◽

2013 ◽

Author(s):

Ricardo Faria ◽

Jorge Sousa ◽

Ana Martins ◽

Joao Lagarto

Keyword(s):

Time Series ◽

Time Series Analysis ◽

Electricity Market ◽

Strategic Behavior ◽

Series Analysis

Download Full-text

Generation flexibility in ramp rates: Strategic behavior and lessons for electricity market design

European Journal of Operational Research ◽

10.1016/j.ejor.2017.02.028 ◽

2017 ◽

Vol 261 (2) ◽

pp. 755-771 ◽

Cited By ~ 15

Author(s):

Ekaterina Moiseeva ◽

Sonja Wogrin ◽

Mohammad Reza Hesamzadeh

Keyword(s):

Electricity Market ◽

Strategic Behavior ◽

Market Design

Download Full-text

Sequential Markets, Market Power, and Arbitrage

The American Economic Review ◽

10.1257/aer.20141529 ◽

2016 ◽

Vol 106 (7) ◽

pp. 1921-1957 ◽

Cited By ~ 32

Author(s):

Koichiro Ito ◽

Mar Reguant

Keyword(s):

Market Power ◽

Electricity Market ◽

Imperfect Competition ◽

Strategic Behavior ◽

Structural Model ◽

Firm Behavior ◽

Welfare Effects ◽

Price Premium ◽

Model Predictions ◽

Price Differences

We develop a framework to characterize strategic behavior in sequential markets under imperfect competition and restricted entry in arbitrage. Our theory predicts that these two elements can generate a systematic price premium. We test the model predictions using microdata from the Iberian electricity market. We show that the observed price differences and firm behavior are consistent with the model. Finally, we quantify the welfare effects of arbitrage using a structural model. In the presence of market power, we show that full arbitrage is not necessarily welfare-enhancing, reducing consumer costs but increasing deadweight loss. (JEL D42, D43, L12, L13, L94, Q41)

Download Full-text

Dynamic Carbon-Constrained EPEC Model for Strategic Generation Investment Incentives with the Aim of Reducing CO2 Emissions

Energies ◽

10.3390/en12244813 ◽

2019 ◽

Vol 12 (24) ◽

pp. 4813 ◽

Cited By ~ 3

Author(s):

Jaber Valinejad ◽

Mousa Marzband ◽

Michael Elsdon ◽

Ameena Saad Al-Sumaiti ◽

Taghi Barforoushi

Keyword(s):

Social Welfare ◽

Carbon Emissions ◽

Electricity Market ◽

Strategic Behavior ◽

Energy System ◽

Development Planning ◽

Investment Incentives ◽

Equilibrium Constraints ◽

The European Union

According to the European Union Emissions Trading Scheme, energy system planners are encouraged to consider the effects of greenhouse gases such as CO 2 in their short-term and long-term planning. A decrease in the carbon emissions produced by the power plant will result in a tax decrease. In view of this, the Dynamic carbon-constrained Equilibrium programming equilibrium constraints (DCC-EPEC) Framework is suggested to explore the effects of distinct market models on generation development planning (GEP) on electricity markets over a multi-period horizon. The investment incentives included in our model are the firm contract and capacity payment. The investment issue, which is regarded as a set of dominant producers in the oligopolistic market, is developed as an EPEC optimization problem to reduce carbon emissions. In the suggested DCC-EPEC model, the sum of the carbon emission tax and true social welfare are assumed as the objective function. Investment decisions and the strategic behavior of producers are included at the first level so as to maximize the overall profit of the investor over the scheduling period. The second-level issue is market-clearing, which is resolved by an independent system operator (ISO) to maximize social welfare. A real power network, as a case study, is provided to assess the suggested carbon-constrained EPEC framework. Simulations indicate that firm contracts and capacity payments can initiate the capacity expansion of different technologies to improve the long-term stability of the electricity market.

Download Full-text