Abstract
Abstract With the onset of large numbers of energy-flexible appliances, in particular plug-in electric and hybrid-electric vehicles, a significant portion of electricity demand will be somewhat flexible and accordingly may be responsive to changes in electricity prices. In the future, this increased degree of demand flexibility (and the onset of only short-term predictable intermittent renewable supply) will considerably exceed present level of uncertainty in day-ahead prediction of assumed inelastic demand. For such a responsive demand idealized, we consider a deregulated wholesale day-ahead electricity marketplace wherein bids by generators (or energy traders) are determined through a Nash equilibrium via a common clearing price (i.e., no location marginality). This model assumes the independent system operator (ISO) helps the generators to understand how to change their bids to improve their net revenue based on a model of demand-response. The model of demand-response (equivalently, demand-side bidding day ahead) is based on information from load-serving entities regarding their price-flexible demand. We numerically explore how collusion between generators and loads can manipulate this market. The objective is to learn how to deter such collusion, e.g., how to set penalties for significant differences between stated and actual demand, resulting in higher energy prices that benefit certain generators.
Highlights
Game-theoretic approaches to the study of electricity markets, under deregulation, have been explored for decades [1,2,3]
Problems associated with variations of the optimum power-flow (OPF) problem [4,5] have been considered by several authors for price-elastic demand, e.g., [6,7]
Demand elasticity for electricity is motivated by the onset of potentially enormous load from flexible appliances, plugin electric and hybrid-electric vehicles, see, e.g., [8,9] and the references therein, where an electric vehicle represents electricity demand comparable to the rest of the household combined
Summary
Game-theoretic approaches to the study of electricity markets, under deregulation, have been explored for decades [1,2,3]. Let Gb ⊂ G be the set of generators on bus b, each having generated power Sg, price per unit supply pg, and minimum and maximum supply Sg(min) and Sg(max), respectively. Assuming fixed generation prices p, and associated clearing price P, the total load (consumer demand) is given by D(P).
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