Dynamic LMP response under alternative price-cap and price-sensitive demand scenarios

This study investigates the complicated nonlinear effects of demand-bid price sensitivity and supply-offer price caps on locational marginal prices (LMPs) for bulk electric power when profit-seeking generators can learn over time how to strategize their supply offers. Systematic computational experiments are conducted using AMES, an open-source agent-based test bed developed by the authors. AMES models a restructured wholesale power market operating through time over an AC transmission grid subject to line constraints, generation capacity constraints, and strategic trader behaviors.