A conceptual research on bidding strategies in electricity markets with step-wise bidding protocol

摘要

The power industry of China is now being restructured and generation markets are expected to be established nationwide in 10-15 years. The Zhejiang Provincial electricity market, as a pilot one, has been successfully operated for more than four years. In an electricity market environment the profits of generation companies depend, to a large extent, on their bidding strategies. Hence optimal bidding has become a major concern. Given this background, a model of bidding strategies based on the Zhejiang Provincial electricity market using step-wise bidding rules is developed in this paper. The bidding behaviors of rival generators are described by a normal distribution function, and the problem of building the optimal bidding strategy for a generation company is then formulated as a stochastic optimization problem and solved by a Monte Carlo approach. A simple numerical example with five suppliers is used for illustrating the essential features of the method.