Do Block Orders Matter? Impact of Regular Block and Linked Orders on Electricity Market Simulation Outcomes

The shift towards a more variable energy production paradigm necessitates further development in the architecture of electricity markets. Current agent-based models, a good tool for evaluating these markets, often overlook the complexity of advanced order types or focus predominantly on optimizing clearing algorithms, thereby missing out on capturing the full breadth of market dynamics. This study fills this gap by examining the effects of incorporating regular block and linked orders on the day-ahead electricity market within an agent-based model. Utilizing the ASSUME framework (Agent-based Simulation for Studying and Understanding Market Evolution), we integrate an iterative mixed-integer linear programming market-clearing algorithm to facilitate regular block and linked orders. To evaluate the real-world applicability of our model, we implement rule-based bidding strategies—incorporating marginal pricing and start-up costs—within the context of Germany's 2020 power mix scenario. Our findings indicate that including regular block and linked orders significantly reduces operational costs, with notable benefits for certain thermal power plants. Furthermore, this integration elevates market clearing prices and influences the dispatch composition, introducing new generation units into the operational mix. This study suggests a positive role of sophisticated order types in electricity markets and their impact on market outcomes, providing valuable insights for the design of future electricity markets.