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

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Abstract

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.

Keywords: Bidding, nonlinear programming, quadratic programming, simulation, electricity markets

JEL Classifications: L94, D44, D47, E17

DOI: https://doi.org/10.32479/ijeep.11382

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Author Biography

Ahmet Yucekaya, Kadir Has University, Istanbul, Turkey

Dr. Yucekaya is the department head at the Department of Industrial Engineering in Kadir Has University. He holds an undergraduate degree in Industrial Engineering, a Master's in strategy development from Istanbul Technical University, a Master 's degree in Industrial Engineering from University of Pittsburgh and a Ph.D. in Industrial & Systems Engineering from Auburn University. He worked as a Research Assistant at the Department of Industrial Engineering in University of Pittsburgh and Auburn University during his graduate studies. He also has industry experience both in Turkey and USA in application and development of engineering systems.

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Published

2021-11-03

How to Cite

Yucekaya, A., & Valenzuela, J. (2021). Electric Power Bid Determination and Evaluation for Price Taker Units under Price Uncertainty. International Journal of Energy Economics and Policy, 11(6), 35–42. Retrieved from http://econjournals.com/index.php/ijeep/article/view/11382

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