Simulation and Evaluation of Zonal Electricity Market Designs
Pär Holmberg () and
Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Zonal pricing with countertrading (a market-based redispatch) gives arbitrage opportunities to the power producers located in the export-constrained nodes. They can increase their profit by increasing the output in the day-ahead market and decrease it in the real-time market (the inc-dec game). We show that this leads to large inefficiencies in a standard zonal market. We also show how the inefficiencies can be significantly mitigated by changing the design of the real-time market. We consider a two-stage game with oligopoly producers, wind-power shocks and real-time shocks. The game is formulated as a two-stage stochastic equilibrium problem with equilibrium constraints (EPEC), which we recast into a two-stage stochastic Mixed-Integer Bilinear Program (MIBLP). We present numerical results for a six-node and the IEEE 24-node system.
Keywords: Two-stage game; Zonal pricing; Wholesale electricity market; Bilinear programming (search for similar items in EconPapers)
JEL-codes: C61 C63 C72 D43 D47 L13 L94 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-com, nep-des, nep-ene, nep-gth, nep-ore and nep-reg
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Working Paper: Simulation and Evaluation of Zonal Electricity Market Design (2018)
Working Paper: Simulation and Evaluation of Zonal Electricity Market Designs (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1829
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