Simulation of the Energy Efficiency Auction Prices via the Markov Chain Monte Carlo Method

Javier Linkolk López-Gonzales,Felipe Leite Coelho Da Silva,Germán Ibacache-Pulgar,Rodrigo Flora Calili,Reinaldo Castro Souza,Natalí Carbo-Bustinza

doi:10.3390/en13174544

Abstract

Over the years, electricity consumption behavior in Brazil has been analyzed due to financial and social problems. In this context, it is important to simulate energy prices of the energy efficiency auctions in the Brazilian electricity market. The Markov Chain Monte Carlo (MCMC) method generated simulations; thus, several samples were generated with different sizes. It is possible to say that the larger the sample, the better the approximation to the original data. Then, the Kernel method and the Gaussian mixture model used to estimate the density distribution of energy price, and the MCMC method were crucial in providing approximations of the original data and clearly analyzing its impact. Next, the behavior of the data in each histogram was observed with 500, 1000, 5000 and 10,000 samples, considering only one scenario. The sample which best approximates the original data in accordance with the generated histograms is the 10,000th sample, which consistently follows the behavior of the data. Therefore, this paper presents an approach to generate samples of auction energy prices in the energy efficiency market, using the MCMC method through the Metropolis–Hastings algorithm. The results show that this approach can be used to generate energy price samples.

Highlights

Energy consumption and economic growth must be directly related [1]
The results of energy efficiency auction prices in Brazil are presented in two stages
A descriptive analysis of the energy prices was carried out and this will allow for obtaining the different simulations to evaluate the behavior of a possible Demand Side Bidding (DSB) price

Summary

Introduction

Energy consumption and economic growth must be directly related [1]. it is important that, when planning efficient energy conservation policies, policymakers consider the direct impacts of energy consumption on economic growth and the consequences on energy consumption [2,3].In addition, studies reveal that with higher levels of economic activity, there are higher levels of energy use and environmental impacts [4,5,6]. Energy consumption and economic growth must be directly related [1]. It is important that, when planning efficient energy conservation policies, policymakers consider the direct impacts of energy consumption on economic growth and the consequences on energy consumption [2,3]. Studies reveal that with higher levels of economic activity, there are higher levels of energy use and environmental impacts [4,5,6]. It is important to address the concept of energy efficiency, since it provides security [7,8] and contributes to the reduction of carbon dioxide (CO2 ). Energy efficiency is one of the best ways to reduce and control greenhouse gas emissions [9].

Objectives

Methods

Results

Conclusion