Understanding Strategic Bidding In Restructured Electricity Markets
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| Author | : Ali Hortaçsu |
| Publisher | : |
| Total Pages | : 50 |
| Release | : 2005 |
| Genre | : Electric utilities |
| ISBN | : |
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.
| Author | : Kankar Bhattacharya |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 323 |
| Release | : 2012-12-06 |
| Genre | : Technology & Engineering |
| ISBN | : 1461514657 |
Deregulation is a fairly new paradigm in the electric power industry. And just as in the case of other industries where it has been introduced, the goal of deregulation is to enhance competition and bring consumers new choices and economic benefits. The process has, obviously, necessitated reformulation of established models of power system operation and control activities. Similarly, issues such as system reliability, control, security and power quality in this new environment have come in for scrutiny and debate. In this book, we attempt to present a comprehensive overview of the deregulation process that has developed till now, focussing on the operation aspects. As of now, restructured electricity markets have been established in various degrees and forms in many countries. This book comes at a time when the deregulation process is poised to undergo further rapid advancements. It is envisaged that the reader will benefit by way of an enhanced understanding of power system operations in the conventional vertically integrated environment vis-a-vis the deregulated environment. The book is aimed at a wide range of audience- electric utility personnel involved in scheduling, dispatch, grid operations and related activities, personnel involved in energy trading businesses and electricity markets, institutions involved in energy sector financing. Power engineers, energy economists, researchers in utilities and universities should find the treatment of mathematical models as well as emphasis on recent research work helpful.
| Author | : Xiao-Ping Zhang |
| Publisher | : John Wiley & Sons |
| Total Pages | : 292 |
| Release | : 2010-10-15 |
| Genre | : Technology & Engineering |
| ISBN | : 1118017072 |
The latest practical applications of electricity market equilibrium models in analyzing electricity markets Electricity market deregulation is driving the power energy production from a monopolistic structure into a competitive market environment. The development of electricity markets has necessitated the need to analyze market behavior and power. Restructured Electric Power Systems reviews the latest developments in electricity market equilibrium models and discusses the application of such models in the practical analysis and assessment of electricity markets. Drawing upon the extensive involvement in the research and industrial development of the leading experts in the subject area, the book starts by explaining the current developments of electrical power systems towards smart grids and then relates the operation and control technologies to the aspects in electricity markets. It explores: The problems of electricity market behavior and market power Mathematical programs with equilibrium constraints (MPEC) and equilibrium problems with equilibrium constraints (EPEC) Tools and techniques for solving the electricity market equilibrium problems Various electricity market equilibrium models State-of-the-art techniques for computing the electricity market equilibrium problems The application of electricity market equilibrium models in assessing the economic benefits of transmission expansions for market environments, forward and spot markets, short-term power system security, and analysis of reactive power impact Also featured are computational resources to allow readers to develop algorithms on their own, as well as future research directions in modeling and computational techniques in electricity market analysis. Restructured Electric Power Systems is an invaluable reference for electrical engineers and power system economists from power utilities and for professors, postgraduate students, and undergraduate students in electrical power engineering, as well as those responsible for the design, engineering, research, and development of competitive electricity markets and electricity market policy.
| Author | : Sebastian Schwenen |
| Publisher | : |
| Total Pages | : 29 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
| Author | : Sanket Gupte |
| Publisher | : |
| Total Pages | : |
| Release | : 2004 |
| Genre | : |
| ISBN | : |
ABSTRACT: Motivated by deregulation in major service sectors like airlines, banking and telecommunication, the electric industry is undergoing a major transformation. However due to design inefficiencies, restructuring of the power sector, so far, has not been a major success. A lack of comprehensive quantitative models has resulted in the inability of the market designers to evaluate market performance and develop successful market designs. A comprehensive model should include market features like two-settlement system, transmission congestion, financial transmission rights (FTRs), demand elasticity, demand-side bidding and other market rules. The contribution of this thesis includes development of an exhaustive modeling framework that includes the above mentioned market features and also development of a computationally effective solution methodology.
| Author | : Stefan Schöne |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 230 |
| Release | : 2009-01-06 |
| Genre | : Business & Economics |
| ISBN | : 3540853650 |
Electricity is an essential commodity traded at power exchanges. Its price is very volatile within a day and over the year. This raises questions about the efficiency of the trading rules. The author develops a non-cooperative auction model analyzing the bidding behavior of producers at power exchanges. Producers are limited by the production capacity of their power plants. Production costs are affiliated. This allows for independence or positive correlation. The author analyzes and compares a uniform-price, a discriminatory, and a generalized second-price auction. Optimal bids, cost efficiency, profits, and consumer prices are examined. A simple probability density function of affiliated production costs is given and used for examples. Numerical results are presented. The results of the analysis can help improving the bidding strategies of producers, selecting the best auction type at power exchanges or detecting price manipulations.
| Author | : |
| Publisher | : Elsevier |
| Total Pages | : 784 |
| Release | : 2021-12-09 |
| Genre | : Business & Economics |
| ISBN | : 0323988881 |
Handbook of Industrial Organization Volume 4 highlights new advances in the field, with this new volume presenting interesting chapters. Each chapter is written by an international board of authors. - Part of the renowned Handbooks in Economics series - Chapters are contributed by some of the leading experts in their fields - A source, reference and teaching supplement for industrial organizations or industrial economists
| Author | : Petter L. Skantze |
| Publisher | : Springer Science & Business Media |
| Total Pages | : 220 |
| Release | : 2012-12-06 |
| Genre | : Technology & Engineering |
| ISBN | : 146151701X |
The challenges currently facing particIpants m competitive electricity markets are unique and staggering: unprecedented price volatility, a crippling lack of historical market data on which to test new modeling approaches, and a continuously changing regulatory structure. Meeting these challenges will require the knowledge and experience of both the engineering and finance communities. Yet the two communities continue to largely ignore each other. The finance community believes that engineering models are too detailed and complex to be practically applicable in the fast changing market environment. Engineers counter that the finance models are merely statistical regressions, lacking the necessary structure to capture the true dynamic properties of complex power systems. While both views have merit, neither group has by themselves been able to produce effective tools for meeting industry challenges. The goal of this book is to convey the fundamental differences between electricity and other traded commodities, and the impact these differences have on valuation, hedging and operational decisions made by market participants. The optimization problems associated with these decisions are formulated in the context of the market realities of today's power industry, including a lack of liquidity on forward and options markets, limited availability of historical data, and constantly changing regulatory structures.
| Author | : Jidong Liu |
| Publisher | : |
| Total Pages | : 160 |
| Release | : 2006 |
| Genre | : Electric utilities |
| ISBN | : |
| Author | : Catherine D. Wolfram |
| Publisher | : |
| Total Pages | : 72 |
| Release | : 1997 |
| Genre | : Auctions |
| ISBN | : |
This paper considers the bidding behavior of participants in the daily auction to supply electricity in England and Wales. Every day, owners of generating capacity submit bids reflecting a price for power from their plants. The price bid by the last plant used to meet electricity needs in a given time period is the price paid for capacity from all plants. Theoretical work on uniform-price multi-unit auctions suggests that bidders selling more than one unit of a good have an incentive to increase the prices they bid at high quantities. If a bid sets the equilibrium price, the bidder receives a higher price for that unit as well as for all inframarginal units. I find evidence of strategic bid increases. First, plants that are likely to be used after a number of other plants are already operating bid more. Second, the larger supplier submits higher bids, all else equal. Lastly, there is some evidence that bids for given plants are higher when the suppliers have more available capacity.
