Comparing system-marginal-price versus pay-as-bid auctions in a realistic electricity market scenario

Eric Guerci and Mohammad Ali Rastegar ()
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Mohammad Ali Rastegar: MBE Group at Amirkabir University of Technology

Chapter Chapter 12 in Managing Market Complexity, 2012, pp 141-153 from Springer

Abstract: Abstract A realistic agent-based computational model of the day-ahead market session of the Italian wholesale electricity market is simulated to compare market performances between system-marginal-price and pay-as-bid clearing mechanisms. An empirical validation of computational results at a macro-level is performed to test for accuracy of simulated outcomes with historical ones. The level of prices are accurately reproduced except for few peak hours. As far as concerns pay-as-bid auction, the computational experiments point out that it results in higher market prices than the system-marginal-price auction. In the pay-as-bid mechanism, sellers’ endeavours to maximize their profits are more costly thus leading to higher price levels

Keywords: Power Plant; Electricity Market; Total Cost Function; Locational Marginal Price; Tacit Collusion (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/978-3-642-31301-1_12

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