Coordination of bidding strategies in energy and spinning reserve markets for competitive suppliers using a genetic algorithm

The problem of building optimally coordinated bidding strategies for competitive suppliers in energy and spinning reserve markets is addressed. It is assumed that each supplier bids a linear energy supply function and a linear spinning reserve supply function into the energy and spinning reserve markets, respectively, and the two markets are dispatched separately to minimize customer payments. Each supplier chooses the coefficients in the linear energy and spinning reserve supply functions to maximize total benefits, subject to expectations about how rival suppliers will bid. A stochastic optimization model is first developed to describe this problem and a genetic algorithm based method is then presented to solve it. A numerical example is utilized to illustrate the essential features of the method.