Game Theory Application and Strategic Bidding in Electricity Supply Market

Abstract

This paper introduced the application of game theory in electricity power market. Moreover, the electricity pool model and the merit order dispatch method was introduced. In pool mode, participants are trying to maximize their benefit via competition with each other. Hence the market can be regarded as a non-cooperative game, especially, the electrical supply competition. Players (generators) could use strategic bidding to occupy advantages in competition. The bidding strategies of generators in electricity pool model were researched via build a 3-generator competition model. Moreover, Nash Equilibrium idea was used to explore generator's optimal bidding strategy. The results show when players are in Nash Equilibrium; thestrategy is their optimal bidding strategy.

Techno-Economic Investment Risk Modeling of Battery Energy Storage System Participating in Day-Ahead Frequency Regulation Market

“…It should be noted that for the purpose of BESS investment risk modeling, we are mostly interested in the price distribution over the entire investment horizon of 10 years. While short-term (a few months to a couple of years) price irregularity may occur, the long-term equilibrium price would be driven by market participants' marginal cost as predicted by microeconomic theory [30]. Sustained MCP above average equilibrium price would attract more market participants to bring down the MCP while the opposite would bankrupt the less competitive market participants to bring up the MCP.…”

A Novel Zero-Sum Polymatrix Game Theory Bidding Strategy for Power Supply Market

“…It is envisaged that the GENCOs can set their bidding marginal costs slightly lower or higher than their respective marginal costs [21], [22], [23]. The prime objective of GENCOs under economic load dispatch is to maximize the profit while satisfying the load demand by selecting an optimal bidding strategy [21], [22], [24].…”

“…It is envisaged that the GENCOs can set their bidding marginal costs slightly lower or higher than their respective marginal costs [21], [22], [23]. The prime objective of GENCOs under economic load dispatch is to maximize the profit while satisfying the load demand by selecting an optimal bidding strategy [21], [22], [24]. In this paper, it is assumed that the market clearing price of the generating system is the marginal costs of scheduled at lowest strategies of all generators for meeting the next hour MW of generation individually.…”

“…The bidding for the next MW of generation by a unit should be such that its marginal cost equals the market clearing cost [21], [25], [26]. The lowest case of all three generators for each set is considered to be the market clearing price for all set of strategy.…”