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The Efficiency of Multi-Unit Electricity Auctions

Abstract:
Using a complete information game-theoretic model, we analyze the performance of different electricity auction structures in attaining efficiency (i. e., least-cost dispatch). We find that an auction structure where generators are allowed to bid for load "slices" outperforms an auction structure where generators submit bids for different hours in the day.

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Energy Specializations: Electricity – R&D and Emerging Technologies; Electricity – Policy and Regulation

JEL Codes: D44: Auctions, C72: Noncooperative Games, C70: Game Theory and Bargaining Theory: General, Q41: Energy: Demand and Supply; Prices, Q40: Energy: General

Keywords: Day-ahead electricity market, Centralized market, unit commitment, self-commitment, game-theoretic model, auctions

DOI: 10.5547/ISSN0195-6574-EJ-Vol20-No4-4


Published in Volume20, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.