Simulation and evaluation of zonal electricity market designs

Arbeitspapier

Zonal pricing with countertrading (a market-based redispatch) gives arbitrage opportunities to the power producers located in the export-constrained nodes. They can increase their profit by increasing the output in the dayahead market and decrease it in the real-time market (the inc-dec game). We show that this leads to large inefficiencies in a standard zonal market. We also show how the inefficiencies can be significantly mitigated by changing the design of the real-time market. We consider a two-stage game with oligopoly producers, wind-power shocks and real-time shocks. The game is formulated as a two-stage stochastic equilibrium problem with equilibrium constraints (EPEC), which we recast into a two-stage stochastic Mixed-Integer Bilinear Program (MIBLP). We present numerical results for a six-node and the IEEE 24-node system.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 1211

Classification and Topics

• Classification: Wirtschaft ; Optimization Techniques; Programming Models; Dynamic Analysis ; Computational Techniques; Simulation Modeling ; Noncooperative Games ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Market Design ; Oligopoly and Other Imperfect Markets ; Electric Utilities
• Subject: Two-stage game ; Zonal pricing ; Wholesale electricity market ; Bilinear programming

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hesamzadeh, Mohammad Reza ; Holmberg, Pär ; Sarfati, Mahir
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/183440
• Last update: 10.03.2025, 11:41 AM CET