Optimal bidding strategies for competitive generators and large consumers

摘要

There exists the potential for gaming such as strategic bidding by participants (power suppliers and large consumers) in a deregulated power market, which is more an oligopoly than a laissez-faire market. Each participant can increase his or her own profit through strategic bidding but this has a negative effect on maximizing social welfare. A method to build bidding strategies for both power suppliers and large consumers in a poolco-type electricity market is presented in this paper. It is assumed that each supplier/large consumer bids a linear supply/demand function, and the system is dispatched to maximize social welfare. Each supplier/large consumer chooses the coefficients in the linear supply/demand function to maximize benefits, subject to expectations about how rival participants will bid. The problem is formulated as a stochastic optimization problem, and solved by a Monte Carlo approach. A numerical example with six suppliers and two large consumers serves to illustrate the essential features of the method.