Bidding strategy of energy storage in imperfectly competitive flexible ramping market via system dynamics method

Abstract

Comparing to the energy market, the market scale of the newly built flexible ramping market is limited. As a result, it is easy for participants to utilize market power to manipulate the market clearing results. As one of the price maker participants, the bidding strategy of energy storage in such imperfectly competitive market is discussed at first. Punishments imposed by the independent system operator (ISO) on capacity withholding and bidding up the price are taken into consideration. The causal feedback and quantitative relationship among various factors in the bidding and market clearing process are analyzed. Bidding modules for different participants and the two-stage market clearing module for ISO are then established via the system dynamics (SD) method. The complete bidding and market clearing model is formed and simulated. Based on the simulation results, the adjustment process of the energy storage’s bidding strategy is investigated. Through a sensitivity test, the impacts of energy storage’s bidding strategy on the market clearing results are illustrated. The benefits of introducing energy storage into the flexible ramping market with imperfect competition are also evaluated.