A cobweb bidding model for competitive electricity markets

Abstract

The new competitive framework that has been established in several electricity markets all over the world has changed the way that electric companies attain benefits. Under this new scenario, generation companies need to develop bidding models not only for the sake of achieving a feasible dispatch of their units, but also for maximizing their benefits. This paper presents a new bidding strategies model which considers the global policy of a company, but also specifies the bid of each generating unit. The proposed model produces a maximum price bid and an optimal bidding quantity by means of an iterative procedure using the generating company's residual demand curve. It is based on an economic principle known as the cobweb theorem, frequently used to study stability in trading markets. A realistic case study from the Spanish daily electric market is presented to illustrate the methodology.

Optimal bidding of a profit-maximizing hydropower producer in day-ahead and real-time markets

“…A stochastic programming model for bidding to two-hour-ahead market is introduced in [8]. More contributions in the field of optimal bidding strategy include [9], [10] and [11].…”

Market Equilibrium and Impact of Market Mechanism Parameters on the Electricity Price in Yunnan’s Electricity Market

“…However, no EOEC are contracted with GENCOs, and GENCOs' behaviors cannot affect the market, so they are in a market as price takers instead of price makers. Thus, the electricity price and power generation in the market can be obtained as each GENCO bid according to the price in the market: n pβ´b 0 q nα`a 0 (14) where p c c and Q c c are electricity price and generation in the perfect competition market. According to the economics theory, the price and generation in the perfect competition market can be regarded as benchmarks for comparison.…”

“…Zhang et al developed optimal bidding strategies for wind power producers by three different strategies [13]. Contreras et al developed a cobweb bidding model for competitive electricity markets [14]. Song et al introduced a conjectural variation-based bidding strategy [15], and Song et al and Day et al presented conjectured supply function (CSF) models to obtain optimal bidding strategies [16,17].…”

Using of a cost-based unit commitment algorithm to assist bidding strategy decisions

“…2 shows the overall power production of the units of the competitive companies calculated for the 7 different MPs, relevant to two periods. On the basis of the obtained overall production levels, a and b coefficients of (11) are identified by means a least-square curve fitting. For the examined cases, a two segment function is considered to be adequate.…”