Separation and Volatility of Locational Marginal Prices in Restructured Wholesale Power Markets

Hongyan Li, Junjie Sun and Leigh Tesfatsion ()

Staff General Research Papers from Iowa State University, Department of Economics

Abstract: This study uses an agent-based test bed ("AMES") to investigate separation and volatility of locational marginal prices (LMPs) in an ISO-managed restructured wholesale power market operating over an AC transmission grid. Particular attention is focused on the dynamic and cross-sectional response of LMPs to systematic changes in demand-bid price sensitivities and supply-offer price cap levels under varied learning specifications for the generation companies. Also explored is the extent to which the supply offers of the marginal (price-determining) generation companies induce correlations among neighboring LMPs. Related work can be accessed at: http://www.econ.iastate.edu/tesfatsi/AMESMarketHome.htm

Keywords: Restructured wholesale power markets; agent-based modeling; locational marginal prices (LMPs); LMP separation; LMP volatility; multi-agent learning; demand-bid price sensitivity; supply-offer price caps; AMES Wholesale Power Market Test Bed (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 D4 D43 L1 L13 L5 Q4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp
Date: 2009-06-09
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Persistent link: http://EconPapers.repec.org/RePEc:isu:genres:13075

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