Optimal Bidding Strategy in Double-Sided Auctions of the Competitive Power Market Using Agent-Based Algorithm

Restructuring in the power industry has led to set new laws and create different exchange power markets. In this case, Generation Companies (supply side) and retailers (demand side) require different optimal bidding strategies to participate in the market. Subsequently, if Generation Companies and retailers simultaneously participate in the wholesale market, then a double-sided auction will be created. In such markets, the price is determined based on supply and demand standards. So, Generation Companies attempt to sell more share of their generation capacity to achieve more profit. Also, retailers attempt to meet their needs, while tolerating lower costs. In this regard, considering a suitable bidding strategy is quite crucial. This will result in the stability and efficiency of the competitive power market. In this paper, a method to obtain and adopt the optimal bidding strategy of Generation Companies and retailers in double-sided auction power market is represented, using an agent-based algorithm. In this algorithm, Generation Companies and retailers are considered as agents, contracting with the market environment. They will learn to optimally submit the bid, such that the highest possible profit will be achieved and their greedy behavior is prevented, as well.