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This paper proposes a semi-analytical method to obtain the equilibrium bidding strategies for generation and demand units in a combined oligopoly and oligopsony wholesale electricity market. Such market structure is the outcome of the increasing deployment of demand response programs that facilitate active participation of demand-side players in the price-setting process. In this analysis, the concept of supply function equilibrium (SFE) is used to investigate the oligopolistic competition among generation units. The SFE model is extended and the demand function equilibrium (DFE) is obtained to study the oligopsonistic competition among demand units. The economic behavior of a market participant is formulated as a bi-level programming (BLP) problem. The imperfect competition among generation units, as well as among demand units, are modeled as a non-cooperative game. Next, a direct method is developed to calculate all candidate equilibriums of the market, and the locational marginal prices (LMPs) in terms of the bidding strategies of the market participants. The BLP problem is solved by obtaining the coordinated Pareto-dominant Nash equilibrium of the market participants’ non-cooperative games. Finally, the proposed analysis is examined in case studies. Accordingly, we report insightful observations with respect to the impact of the changes in the new market structure, at firm-level and market-level, such as in terms of mitigating market power of generation units, the market clearing prices and quantities, surplus for generation units and demand units, and potential impact on market efficiency. [ABSTRACT FROM AUTHOR]

The bidding behaviors of the energy storage systems (ESS) are complicated due to time coupling and market coupling limited by their capacity states. The existing research is mainly based on optimization models and reinforcement learning (RL) models, which are idealized with analytical objective functions, rational decisions, and virtual historical data. This leads to mismatches between theoretical results and actual bidding behaviors, and the obtained results cannot be generalized to a real-world market. In recent years, the disclosure of market data has enabled data-driven analysis, while the complexity of actual data makes the analysis process challenging and calls for more suitable methods. On the basis of our investigation of ESS bidding behaviors and market data, we propose a novel inverse RL (IRL)-based framework to identify the bidding decision objective function of ESS in coupled multi-market through their historical bidding records and operation status. The identification results can be used as the model parameters to help RL-based simulation models available for a real-world market. Based on the proposed framework, we conduct an empirical analysis on the real-world data of a battery ESS in the Australian electricity market. The results show how the ESS balances its objective among different markets and maintains its state of charge (SOC) to gain more profits. This framework can help us model ESS behaviors by relying on historical data to better understand the ESS bidding decision-making mechanism, which will facilitate market equilibrium analysis and mechanism design. [ABSTRACT FROM AUTHOR]

Transitioning from fossil fuel dominated power systems to high penetrations of intermittent renewable generation is affecting classical electricity market designs. Here, a method is proposed to model and assess the absence of co-optimization of energy and reserve that prevails in the European system. Co-optimization is formulated through an optimization problem (COM), and its absence as an equilibrium problem (EQM) built on Karush-Kuhn-Tucker conditions of agents’ optimization and market clearing equations. EQM cannot be reformulated as a single optimization problem. Market distortions are identified by comparing the complementarity conditions of both models. These are then discussed on system with Feed in Premium to wind generation. Parameters in the models allow to represent different market configurations regarding: available wind generation, Feed in Premium to wind, generators’ risk aversion, and required reserve from wind generation. [ABSTRACT FROM AUTHOR]