By Stefan Schöne (eds.)
Electricity is a necessary commodity traded at strength exchanges. Its expense is particularly unstable inside an afternoon and over the yr. This increases questions on the potency of the buying and selling rules.
The writer develops a non-cooperative public sale version studying the bidding habit of manufacturers at strength exchanges. manufacturers are restricted through the creation capability in their energy crops. construction charges are affiliated. this permits for independence or optimistic correlation. the writer analyzes and compares a uniform-price, a discriminatory, and a generalized second-price public sale. optimum bids, expense potency, gains, and shopper costs are tested. an easy chance density functionality of affiliated creation charges is given and used for examples. Numerical effects are presented.
The result of the research may also help enhancing the bidding concepts of manufacturers, selecting the right public sale style at energy exchanges or detecting cost manipulations.
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Extra resources for Auctions in the Electricity Market
The auctioneer, who is also responsible for the electricity grid, acts as a proxy for consumers and buys electricity from producers. He can choose among three auction types. The uniform price auction pays every winning generator the same price. In the discriminatory auction, the price of the winner is his own bid. Payments of the generalized second-price auction follow the idea of the second price or Vickrey auction. Generators own one power plant each. Producing more electricity than the production capacity is not feasible.
If the bid function used by generators is increasing with marginal costs, or demand is greater than or equal to production capacity of the whole market, the following statements are valid. , the production schedule with the lowest costs. (b) The expected production costs per electricity unit for d ∈ (0, k] are given by c¯ E [c] = 2 c¯ cF (c) [ f (c| c) + Fi (c| c)] dc − 2 c F (c) [1 − F (c| c)] dc. 4) c In the case of independence, the expression reduces to c¯ i E c c¯ 2 = c¯ + F (c) dc − 2 c F (c) dc.
If demand is greater than or equal to the whole production capacity of both generators and the bids of both bidders are accepted by the auctioneer, the order of acceptance of the generators does not matter because both are needed with their entire capacity. Again, no other production schedule can be found that allows lower production costs. Hence, the production schedule, which is an outcome of the auction, provides the lowest cost and is therefore cost efficient. (b) The expected cost per electricity unit is the expected average of total production costs.
Auctions in the Electricity Market by Stefan Schöne (eds.)