By Stefan Schöne (eds.)

ISBN-10: 3540853642

ISBN-13: 9783540853640

Electricity is an important commodity traded at energy exchanges. Its rate is particularly risky inside of an afternoon and over the 12 months. This increases questions about the potency of the buying and selling rules.

The writer develops a non-cooperative public sale version examining the bidding habit of manufacturers at energy exchanges. manufacturers are restricted by way of the construction potential in their energy crops. construction bills are affiliated. this permits for independence or optimistic correlation. the writer analyzes and compares a uniform-price, a discriminatory, and a generalized second-price public sale. optimum bids, rate potency, gains, and patron costs are tested. an easy chance density functionality of affiliated construction expenditures is given and used for examples. Numerical effects are presented.

The result of the research will help enhancing the bidding thoughts of manufacturers, selecting the right public sale kind at strength exchanges or detecting rate manipulations.

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Additional resources for Auctions in the Electricity Market

Example text

3. In all other cases, the bidder with the highest bid gets the reservation price paid. The bidder with the lowest bid receives the reservation price for the amount of electricity that his competitor sells. The price for the remaining electricity is the bid of the competitor. This auction adopts the idea of the second price auction or Vickrey auction. 17 This makes it an interesting candidate for analysis. The basic principle of the auction is to pay the winning bidder the price the auctioneer would have had paid if the winner had not taken part.

A) In the case of using a bid function which is increasing in marginal costs, the generator with the lowest cost is always selected to serve the whole demand as long as his production capacity is not fully used. Only if demand is greater, the generator with higher costs is allowed to produce the remaining quantity. No other allocation of the right to produce power leads to a lower cost. If demand is greater than or equal to the whole production capacity of both generators and the bids of both bidders are accepted by the auctioneer, the order of acceptance of the generators does not matter because both are needed with their entire capacity.

Ci denotes the costs of generator i to produce one unit. It is the realization of the stochastic information variable Ci , i = 1, 2. 6. Marginal costs are private information of the generator. Competition between generators of the same power plant type is of interest because they are the strongest competitors due to their comparable costs. These generators face similar fixed costs, run-up costs and marginal costs. Fixed costs must be covered by the contribution margin of the entire production. A generator who does 7 Average marginal costs of power plants running with different fuels for the market in England and Wales are given by Wolfram (1998), p.

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Auctions in the Electricity Market by Stefan Schöne (eds.)


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