Abstract
Many electricity markets around the world are still at developmental and transitional stages. To complete the transition and achieve the key objectives of perfect market design, designers often choose direct electricity procurement of large consumers (LCs) as a pilot. The trading mechanism is critical because it lays the foundation for the exploration of formulating a trading model and the succeeding solution; however, the existing trading mechanisms of direct electricity procurement struggle to cope with new challenges that electric power systems are facing. This paper proposes a novel two-stage trading mechanism, considering both the fairness and efficiency of direct electricity procurement. Based on the proposed trading mechanism, an agent-based trading model with multiple participants is developed. The simulation results of the transactions between LCs and generation companies (GenCos) illustrate the feasibility and effectiveness of the proposed mechanism. With this mechanism, LCs and GenCos will have more choices in the trading process and can benefit from the reduction of the average market price. The two-stage trading model provides a new choice for market designers and participants of direct electricity procurement.
Highlights
Electricity markets have been established in many countries around the world
According to the practical experience of direct electricity procurement, the number of large consumers (LCs) Agents participating in direct electricity procurement is usually larger than the number of generation companies (GenCos) Agents, and the maximum tradable electricity volume of GenCo Agents is generally higher than the trading volume of LC Agents
The trading mechanism for direct electricity procurement is critical because it lays the foundation for the exploration of formulating the strategy optimization model and the succeeding solution; the existing trading mechanisms of direct electricity procurement struggle to cope with new challenges
Summary
Electricity markets have been established in many countries around the world. Since the 1960s, when most power was provided by vertically integrated utilities [1], many milestones have already been reached with the ultimate goal of achieving increasingly efficient and fair markets for electricity. To deal with the uncertainties, unknown parameters, and the dynamics of the electricity market, the supply function equilibrium model with a uniform price was considered in reference [32]; a reinforcement learning method with non-cooperative multi-agent was utilized to find the optimal solution for the proposed Markov game model From another perspective, the problems of the trading mechanism can be divided according to the number of participants in the negotiation on each side of the market. This paper proposes a novel trading mechanism of direct electricity procurement, which includes two bidding stages, to provide a new choice for GenCos and LCs in the process of electricity market reform.
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