Supply Bidding Analysis in the PAB Electricity Market of Iran Using Holmberg's Approach

Shahram Moeeni (), Babak Saffari (), Alimorad Sharifi () and Saeed Hayati ()
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Shahram Moeeni: Assistant Professor of Economics, University of Isfahan
Babak Saffari: Assistant Professor of Economics, University of Isfahan, (Corresponding Author)
Alimorad Sharifi: Associate professor of Economics, University of Isfahan
Saeed Hayati: Ph.D. Candidate in Statistics, University of Isfahan

Quarterly Journal of Applied Theories of Economics, 2020, vol. 6, issue 4, 1-26

Abstract: During the past few decades, governments around the world have been allowing market forces to play an increasing role in the electricity sector. The transition from the monopoly framework has led to the restructuring of the electricity market in leading economies to achieve greater competition and efficiency. Government of Iran also has been implemented a daily market for the competition of power plants in electricity sales based on supply bidding mechanism in order to guarantee reliability and efficiency. The basis of this mechanism is the Klemperer and Meyer (1989) study. This paper first introduces the supply bidding model of Holmberg (2009). Then current bidding of selected power plant in the Iranian electricity market compare with the optimal bidding. For this purpose, the demand uncertainty structure is estimated at the specified days in different seasons. Finally the optimal bids of Holmberg model are estimated. The results indicate that supply bids of the selected public power plant are suboptimal and can be improved by using the model. Alternative payment approach called uniform price can also be replaced to compare tow mechanisms

Keywords: Electricity Market; Restructuring; Holmbergs Model; Pay as Bid Auction; Uniform Price Auction (search for similar items in EconPapers)
JEL-codes: C61 C72 D21 Q41 (search for similar items in EconPapers)
Date: 2020
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