Optimal bidding strategy of generating companies in imperfect electricity markets

Abstract

This work presents a new method for calculating the optimal bidding strategies among Generating Companies (GENCOs) in the electricity markets with imperfect competition and complete information. In this paper, the parameterized Supply Function Equilibrium (SFE) is employed for modeling the imperfect competition among GENCOs. A pay-as-LMP pricing mechanism is assumed for settling the market and calculating the GENCOs' profits. In this paper, the GENCO's profit expression is calculated in terms of its strategy and then the optimal strategy is determined analytically. An example and a case study are used to illustrate the properties of this market and the efficiency of the proposed method.