Application of genetic on analysis of market equilibrium strategy with game theory

Abstract

In oligopoly competition electricity market, bidding strategy and utility of market participants interact each other, which means any change of bidding made by one market participant will influence the strategy and utility of all other market participants. Because of the characteristics of gaming between market participant and incomplete information of opponents, an important tool of game theory is needed to analyze behavior of market participants and to forecaste tendency of electricity market. The actual situations of electricity market in operation, such as multi-constrained bidding curve of market participants, multi- types of bidding strategy of traders, and complex market rules, make it insurmountable for game theory to analyze the equilibrium strategy of electricity market. This paper presented an combination analysis model of game theory and genetic algorithm to reflect the actual situation of electricity. Firstly, the general analysis method of game theory is introduced . Then, the constraints and types of bidding curve are analyzed, bidding curve model is constructed, and the transaction utility calculation model of all participants is defined. Eventually, the analysis model of market equilibrium is constructed with game theory, and is implemented with genetic algorithm. In the market equilibrium analysis, each market participants might own multiple bidding units which has independent constraints and bidding curves. Calculation results indicate that the analysis method presented in this paper was consistent with actual operation of electricity market, fully reflected the market rule of electricity in operation, and could interpret the bidding behavior of market participants. Analysis results of bidding strategy equilibrium combination could be used directly in bidding decision-making of power provider and market clear price forecasting, and might play a great role in power provider bidding decision-making technical support system.