Economic efficiency of coordinated multilateral trades in electricity markets

• Published in: International journal of electrical power & energy systems 2002-12, Vol.24 (10), p.843-850
• Main Authors: Al-Agtash, Salem, Su, Renjeng
• Format: Article
• Language: English
• Subjects: Applied sciences; Coordinated multilateral trades; Deadweight efficiency loss; Economic efficiency; Electrical engineering. Electrical power engineering; Electrical power engineering; Electricity markets; Exact sciences and technology; PoolCo; Power networks and lines
• ISSN: 0142-0615; 1879-3517
• DOI: 10.1016/S0142-0615(01)00090-4

This paper presents economic efficiency evaluation of electricity markets operating on the basis of a coordinated multilateral trading concept. The evaluation accounts for the overall costs of power generation, network losses, and system and unit constraints. We assume a non-collusive oligopolistic competition. An iterative Cournot model is used to characterize the competitive behavior of suppliers. A supplier maximizes the profit of each of his generating units while taking rivals' generation as given. Time span is over multiple hours. This leads to a mixed integer non-linear programming problem. We use the augmented Lagrangian approach to solve iteratively for globally optimal schedules. An IEEE 24-bus, 8-supplier, and 17-customer test system is used for illustration. The results show that such a market at times of light demands exhibits little market power, and at times of large demands exhibits a great deal of market power. This contrasts with the PCMI and HHI concentration measures, which give fixed measurement values of market power. The results of two-year (730 round) market simulations show a range of deadweight efficiency loss between 0.9 and 6% compared to that of PoolCo which results in a range between 0.5 and 10% for the same test case.