Table of Contents
Journal of Industrial Engineering
Volume 2014 (2014), Article ID 764953, 13 pages
http://dx.doi.org/10.1155/2014/764953
Research Article

Simulation on Bidding Strategy at Day-Ahead Market

1Interconnected Electric Power Systems Task Force, Power System Division, The Kansai Electric Power Co., Inc., 6-16, 3-Chome, Nakanoshima, Kita-ku, Osaka 530-8270, Japan
2Power Engineering R&D Center, Research and Development Department, The Kansai Electric Power Co., Inc., 11-20 Nakoji, 3-Chome, Amagasaki, Hyogo 661-0974, Japan

Received 10 September 2013; Accepted 20 December 2013; Published 9 February 2014

Academic Editor: C. K. Kwong

Copyright © 2014 Kazunori Sawai and Tetsuo Sasaki. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In an electric power day-ahead market, market prices are not always cleared at marginal cost caused by the strategic bidding of generators. This paper presents the results of day-ahead market simulation by using a simple three-generation-companies’ model for the case of demand with price sensitivity and analysis of the profits depending upon bidding strategies. The results show that, without a demand response, generation companies with diverse generation can increase their profit by strategic bidding. Moreover, under this condition, even if the demand response is made sensitive, these characteristics do not change. It is clarified that one of these factors is the operating constraint of power generators. If the generation company’s low-cost power generators decrease, the company’s profit monotonically decreases as the speculated capacity increases. However, realizing this case requires an unreal demand response and many small companies without diverse generation. Unless the conditions above are satisfied, the wholesale power transactions only through a day-ahead market without price-sensitive demand mechanisms would create a sellers' market, where the sellers can easily manipulate the price.