A Data-Driven Study to Discover, Characterize, and Classify Convergence Bidding Strategies in California ISO Energy Market

Abstract

Convergence bidding has been adopted in recent years by most Independent System Operators (ISOs) in the United States as a relatively new market mechanism to enhance market efficiency. Convergence bidding affects many aspects of the operation of the electricity markets and there is currently a gap in the literature on understanding how the market participants strategically select their convergence bids in practice.To address this open problem, in this paper, we study three years of real-world market data from the California ISO energy market. First, we provide a data-driven overview of all submitted convergence bids (CBs) and analyze the performance of each individual convergence bidder based on the number of their submitted CBs, the number of locations that they placed the CBs, the percentage of submitted supply or demand CBs, the amount of cleared CBs, and their gained profit or loss. Next, we scrutinize the bidding strategies of the 13 largest market players that account for 75% of all CBs in the California ISO market. We identify quantitative features to characterize and distinguish their different convergence bidding strategies. This analysis results in revealing three different classes of CB strategies that are used in practice. We identify the differences between these strategic bidding classes and compare their advantages and disadvantages. We also explain how some of the most active market participants are using bidding strategies that do not match any of the strategic bidding methods that currently exist in the literature.

A Data-Driven Convergence Bidding Strategy Based on Reverse Engineering of Market Participants' Performance: A Case of California ISO

“…Compared to the preliminary conference version of this work in [17], the current journal submission has several new and important contributions. In fact, the two major tasks of reverse engineering the existing CB strategies as well as designing a new comprehensive convergence bidding strategy are both new in this journal version.…”

Optimization Decomposition of Monthly Contracts for Integrated Energy Service Provider Considering Spot Market Bidding Equilibria

“…In terms of the convergence of the medium-and long-term market and spot market transactions, the traditional decomposition method is mostly for the average decomposition of the medium-and long-term contract volume, and the decomposition result of the medium-and long-term market is used as the clearing boundary of the spot market to obtain the final actual operating curve [20][21][22]. Literature [23] proposes a quadratic planning method for the decomposition of the medium-and long-term contracted power volume and takes the decomposed daily power volume as the constraint to ensure the fairness of the bidding unit scheduling.…”