Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty

<p>Power companies aim to maximize their profit which is highly related to the bidding strategies used. In order to sell electricity at high prices and maximize their profit, power companies need suitable bidding models that consider power operating constraints and price uncertainty within the...

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Autores principales:	Ahmet Yucekaya, Jorge Valenzuela
Formato:	article
Lenguaje:	EN
Publicado:	EconJournals 2021
Materias:	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5
Acceso en línea:	https://doaj.org/article/fe2769557e27425a98294c6498095c20
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spelling	oai:doaj.org-article:fe2769557e27425a98294c6498095c202021-11-12T07:27:31ZElectric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty2146-4553https://doaj.org/article/fe2769557e27425a98294c6498095c202021-11-01T00:00:00Zhttps://econjournals.com/index.php/ijeep/article/view/11382https://doaj.org/toc/2146-4553<p>Power companies aim to maximize their profit which is highly related to the bidding strategies used. In order to sell electricity at high prices and maximize their profit, power companies need suitable bidding models that consider power operating constraints and price uncertainty within the market. Price taker units have no power to affect the prices but need to determine their best bidding strategy to maximize their profit assuming a quadratic cost function and uncertain market prices. Price taker units also need to evaluate their bidding strategy under different price scenarios. In this paper, we first model the bidding problem for a price taker unit and then propose quadratic programming, nonlinear programming and marginal cost based bidding models under price uncertainty. We use case studies to study the computation burden and limitation to reach a solution. We also propose a simulation methodology to evaluate the performance of each bidding strategy for different market prices in an effort to help decision makers to assess their bidding decisions.</p><p><strong>Keywords: </strong>Bidding, nonlinear programming, quadratic programming, simulation, electricity markets<strong></strong></p><p class="Default"><strong>JEL Classifications</strong>: L94, D44, D47, E17</p><p class="Default">DOI: <a href="https://doi.org/10.32479/ijeep.11382">https://doi.org/10.32479/ijeep.11382</a></p>Ahmet YucekayaJorge ValenzuelaEconJournalsarticleEnvironmental sciencesGE1-350Energy industries. Energy policy. Fuel tradeHD9502-9502.5ENInternational Journal of Energy Economics and Policy, Vol 11, Iss 6, Pp 35-42 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5
spellingShingle	Environmental sciences GE1-350 Energy industries. Energy policy. Fuel trade HD9502-9502.5 Ahmet Yucekaya Jorge Valenzuela Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty
description	<p>Power companies aim to maximize their profit which is highly related to the bidding strategies used. In order to sell electricity at high prices and maximize their profit, power companies need suitable bidding models that consider power operating constraints and price uncertainty within the market. Price taker units have no power to affect the prices but need to determine their best bidding strategy to maximize their profit assuming a quadratic cost function and uncertain market prices. Price taker units also need to evaluate their bidding strategy under different price scenarios. In this paper, we first model the bidding problem for a price taker unit and then propose quadratic programming, nonlinear programming and marginal cost based bidding models under price uncertainty. We use case studies to study the computation burden and limitation to reach a solution. We also propose a simulation methodology to evaluate the performance of each bidding strategy for different market prices in an effort to help decision makers to assess their bidding decisions.</p><p><strong>Keywords: </strong>Bidding, nonlinear programming, quadratic programming, simulation, electricity markets<strong></strong></p><p class="Default"><strong>JEL Classifications</strong>: L94, D44, D47, E17</p><p class="Default">DOI: <a href="https://doi.org/10.32479/ijeep.11382">https://doi.org/10.32479/ijeep.11382</a></p>
format	article
author	Ahmet Yucekaya Jorge Valenzuela
author_facet	Ahmet Yucekaya Jorge Valenzuela
author_sort	Ahmet Yucekaya
title	Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty
title_short	Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty
title_full	Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty
title_fullStr	Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty
title_full_unstemmed	Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty
title_sort	electric power bid determination and evaluation for price taker units under price uncertainty
publisher	EconJournals
publishDate	2021
url	https://doaj.org/article/fe2769557e27425a98294c6498095c20
work_keys_str_mv	AT ahmetyucekaya electricpowerbiddeterminationandevaluationforpricetakerunitsunderpriceuncertainty AT jorgevalenzuela electricpowerbiddeterminationandevaluationforpricetakerunitsunderpriceuncertainty
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Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty

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