Electricity Market Simulator to Assess the Implementation of Free Prices considering the Transmission Network

Abstract

After the liberalization of the electricity sector, electricity wholesale markets computed market prices based on audited costs or based on free prices. The first one has been implemented in many Latin American countries, while free prices have been implemented in more liberalized and competitive markets. The aim of this work is to develop a hydrothermal market simulator to evaluate the impact of migrating an electricity market based on audited costs to one based on free prices. The simulator considers different generating firms and includes the transmission network by means of a methodology of analytical derivation to find equilibria of pure strategies. The strategic behavior of the firms has been modeled through the Nash-Cournot Equilibrium.