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Market power analysis in the EEX electricity market: An agent-based simulation approach

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4 Author(s)
Jianhui Wang ; Decision & Inf. Sci. Div., Argonne Nat. Lab., Argonne, IL ; Botterud, A. ; Conzelmann, G. ; Koritarov, V.S.

In this paper, an agent-based modeling and simulation (ABMS) approach is used to model the German wholesale electricity market. The spot market prices in the European Energy Exchange (EEX) are studied as the wholesale market prices. Each participant in the market is modeled as an individual rationality-bounded agent whose objective is to maximize its own profit. By simulating the market clearing process, the interaction among agents is captured. The market clearing price formed by agentspsila production cost bidding is regarded as the reference marginal cost. The gap between the marginal cost and the real market price is measured as an indicator of possible market power exertion. Various bidding strategies such as physical withholding and economic withholding can be simulated to represent strategic bidding behaviors of the market participants. The preliminary simulation results show that some generation companies (GenCos) are in the position of exerting market power by strategic bidding.

Published in:

Power and Energy Society General Meeting - Conversion and Delivery of Electrical Energy in the 21st Century, 2008 IEEE

Date of Conference:

20-24 July 2008