Abstract
In the context of agent-based simulation framework of collusion, this paper seeks for two-sided tacit collusion among supply-side and demand-side participants in a constrained network and impacts of this collusion on the market outcomes. Tacit collusion frequently occurs in electricity markets due to strategic behavior of market participants arose from daily repetition of energy auctions. To attain detailed analysis of tacit collusion, state-action-reward-state-action (SARSA) learning algorithm and the standard Boltzmann exploration strategy based on the Q-value are used to model market participants’ behavior. A model is presented that integrates exploration and exploitation into a single framework, with the purpose of tuning exploration in the algorithm. In order to appraise the feasibility of collusion, a theoretical study on a three-node power system with three scenarios is depicted considering three Gencos and two Discos which proves the formation of two-sided tacit collusion between Genco and Disco. Simulation results show different collusive strategies of participants and how parameters of the algorithm impact on simulation outcomes. It is also shown that congestion on transmission line has a significant influence on behavior of market participants.
Highlights
The electricity market is a double-sided auction in which supply-side and demand-side participants can freely trade energy in different time horizons
In order to appraise the feasibility of collusion, a theoretical study on a three-node power system with three scenarios is depicted considering three Gencos and two Discos which proves the formation of two-sided tacit collusion between Genco and Disco
This paper investigates the behavior of Gencos and Discos in the DA electricity market, where seller and buyer agents engage in our simulation framework
Summary
The electricity market is a double-sided auction in which supply-side and demand-side participants can freely trade energy in different time horizons. In [5], tacit collusion is analyzed in repeated uniform price auctions where firms with symmetric and capacity-constrained characteristics compete in an oligopoly market. The analysis sets a target to study the sustainability of collusion under two pricing rules, i.e., uniform and discriminatory In these studies, firms learn to engage in collusion with the primary focus on supply-side participants. A: Gen-A strategically offersThree in theGencos first hour order to withhold capacity and sizes, try to between a Genco and a Disco is feasible.
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