NDLI: Research on optimal bidding strategies for power suppliers based on sealed auction

Content Provider	IEEE Xplore Digital Library
Author	Wenxia You Dandan Xu Wenwu Li
Copyright Year	2010
Description	Author affiliation: College of Electrical Engineering & Renewable Energy, China Three Gorges University, Yichang, Hubei, China (Wenxia You; Dandan Xu; Wenwu Li)
Abstract	In the background of deregulated electricity marketplaces, the electricity price is not determined by a power authority but by competitive bidding behaviors of power suppliers. Competitive bidding makes power supplies being no longer just the electricity price takers. Each power supplier becomes involved in setting the electricity price. He could maximize his own profits according to information of his private cost and the market. But at the same time, power suppliers have to face some uncertain market information. It is significant to build power suppliers' bidding strategies models which can provide support for suppliers' bidding decision. Fortunately, sealed auction is a static game of incomplete information in essence and it can be more conformed to the features of bidding in electricity market, so auction models have been proposed for representing strategic behaviors of power suppliers. The related literatures for the most part have considered the costs as independent random variables drawn from some specific distribution and the price as an expected forecast value. However, given the demand, the price in fact is determined by the ordered bids of suppliers according to the market clearing rules. So the clearing price is a function of the power supplier's own bid and the competitive opponents' bids distributions. Based on the hypothesis that all suppliers have the same generation capacity and have no withholding strategies, the number of winners is fixed when the power demand is given. Hence, the market clearing price is an order statistic. In this paper, the sealed auction theory is applied to analysis the power supplier's bidding actions. Firstly, the probabilities of a supplier winning or loosing the bid are obtained in virtue of the order statistic method. The power supplier's bidding model is constructed. The general expressions of optimal bidding strategies of suppliers are derived next by using optimization theory and solving a differential equation. The results suggest that the equilibrium bid is increasing in cost and is always above or equal to the cost. The bid-cost margin is influenced by the total quantity of demand and the costs distributions. Then, a numerical example is presented to confirm the presented method. At last, the power demand's effects on the suppliers' bidding strategies are discussed.
Starting Page	1
Ending Page	5
File Size	759772
Page Count	5
File Format	PDF
ISBN	9781424459384
e-ISBN	9781424459407
DOI	10.1109/POWERCON.2010.5666545
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2010-10-24
Publisher Place	China
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Analytical models Education order statistic power suppliers sealed auction bidding strategies private information market clearing price
Content Type	Text
Resource Type	Article

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4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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