Game theory and competitive aspects in electricity markets

The liberalization of electricity markets in Europe was a highly-debated topic in the last thirty years. Almost three decades after the start of the deregulation processes, performances obtained by the introduction of competition in the electricity markets are still difficult to be perceived by final consumers. Until now, the assumption that the deregulated electricity markets naturally generate lower prices for consumers and economic efficiency has not been verified yet. In a deregulated electricity marketplace, participants are more interested in maximizing their own profits rather than contributing the system-wide benefits. Moreover, the particular features of the electricity industry determine electricity market participants to be more aggressive in their bidding strategies. Therefore, studying the bidding strategies of the electricity market participants becomes an important issue. In this paper, the bidding strategies for three classical power producers are analyzed for different level of power system demand in single-auction market.