Optimal bidding strategies for LSEs in single-bargainer electricity markets

Abstract

The single-bargainer bidding model makes a new way for solving electricity prices rising when the market is lack of electricity supply. In the single-bargainer electricity markets, the profits of load serving entities (LSEs), to a certain extent, depend on their bidding strategies. In this paper, a methodological framework is proposed for developing optimal bidding strategies for LSEs participating in a single-bargainer electricity market in which sealed auction with step-wise quantity/price bidding functions and pay-as-bid settlement protocols are utilized. A normal distribution function is used to describe the bidding behaviors of rivals, and the problem of constructing optimal bidding strategies for distribution companies is then formulated as a stochastic optimization problem. The solution is based on the Monte-Carlo method. Finally, a single-bargainer electricity market with 4 LSEs is selected as an bench mark example to demonstrate the effectiveness of the proposed model.