Strategic bidding in an optimal power flow electricity market

Strategic bidding to take advantage of global or local market power is a concern in many of the new electricity markets. Here the characteristics of the optimal power flow (OPF) market-clearing paradigm are studied analytically and by simulation. Although it is shown that the OPF algorithm is vulnerable to strategic behavior there is a self-regulating mechanism, which limits the abuses. Gaming by selectively congesting a particular transmission line is shown to be possible under the assumption of perfect information.