Simulating the dynamics in two-settlement electricity markets via an agent-based approach

Abstract

This paper studies the dynamics in two-settlement electricity markets. In these markets, energy producers sign strategic forward contracts in the forward market, and engage in spatial oligopolistic competition in the spot market. We develop an agent-based model for simulating the outcomes of such markets. Numerical simulations imply that the access to the forward market leads to more competitive behaviors of the suppliers in the spot market, and thus to lower spot energy prices.

Agent-based simulation of electricity markets: a survey of tools

“…The ISO in MASCEM only takes the marketing and scheduling functions, and the dispatch task is fulfilled by the network operator. In Veit et al (2006), the ISO has core functions such as marketing, scheduling, and dispatch. In PowerACE, a similar agent called market operator assumes only the marketing function of the ISO.…”

“…Bower and Bunn (1999) model mainly focuses on the market function and leaves out other system capabilities. Common system capabilities in AMES, MASCEM, Veit et al (2006) model, and PowerACE cover generation, marketing, transmission, and some central administrative functions. In particular, a five-node transmission grid is used in AMES as a simplified physical transmission model.…”

“…The market facilitator and the market operator in MASCEM act, respectively, as the regulator and the ISO in an EM. Veit et al (2006) model considers the core agents in an EM. The demand and supply agents are actually customers and generation companies, respectively.…”

“…Supported by historical information, scenario analyses conducted by each agent could cover the strategic decisions in both markets by analyzing possible scenarios and determining the best strategy under each scenario. Veit et al (2006) use ABS to study the dynamics of a two-settlement EM consisting of one forward market and one spot market. In their ABS models, demand agents, supply agents, transmission line provider agents (TLP), and an ISO are the principal system participants.…”

“…The EM in MASCEM includes a pool market and a bilateral contract market. Veit et al (2006) model has a two-settlement EM, which is composed of one forward market and one spot market. Finally, in PowerACE, in addition to two regular markets (a pool market and a bilateral market), an additional market for CO 2 emission allowance is included.…”