Title :
Price formation and market power in a low carbon electricity system
Author :
Morrow, Iain ; Bunn, Derek
Author_Institution :
Cambridge Economic Policy Assoc., London, UK
Abstract :
We consider an agent-based model of forward trading in electricity. Electricity suppliers and generators buy and sell power in three stylized markets: the forward market, the intra-day or prompt market and the real-time spot or ancillary services market. Using computational learning, we develop a model whereby agents´ strategies are determined by evolved neural networks of arbitrary size and topology. In a high carbon system similar to today´s conventional fossil-fuel based supply stacks, simple strategies for both agents emerge. When substantial wind generation is included, however, these strategies are seen to be no longer appropriate. New insights relating to the impact of wind on fossil generator market power have substantial implications for price formation and the investment signals regarding peaking capacity.
Keywords :
learning (artificial intelligence); power engineering computing; power generation economics; power markets; pricing; thermal power stations; wind power plants; agent strategies; ancillary services market; computational learning; electricity suppliers; evolved neural networks; forward market; fossil generator; intraday market; low carbon electricity system; market power; price formation; prompt market; real-time spot market; wind impact; Artificial neural networks; Computational modeling; Electricity; Electricity supply industry; Face; Generators; Wind power generation; agents; electricity markets; low carbon; market power; price; renewable;
Conference_Titel :
Energy Market (EEM), 2011 8th International Conference on the European
Conference_Location :
Zagreb
Print_ISBN :
978-1-61284-285-1
Electronic_ISBN :
978-1-61284-284-4
DOI :
10.1109/EEM.2011.5953126
