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Supply Bidding Analysis in the PAB Electricity Market of Iran Using Holmberg's Approach

Author

Listed:
  • Moeeni, Shahram

    (Assistant Professor of Economics, University of Isfahan)

  • Saffari, Babak

    (Assistant Professor of Economics, University of Isfahan, (Corresponding Author))

  • Sharifi, Alimorad

    (Associate professor of Economics, University of Isfahan)

  • Hayati, Saeed

    (Ph.D. Candidate in Statistics, University of Isfahan)

Abstract

During the past few decades, governments around the world have been allowing market forces to play an increasing role in the electricity sector. The transition from the monopoly framework has led to the restructuring of the electricity market in leading economies to achieve greater competition and efficiency. Government of Iran also has been implemented a daily market for the competition of power plants in electricity sales based on supply bidding mechanism in order to guarantee reliability and efficiency. The basis of this mechanism is the Klemperer and Meyer (1989) study. This paper first introduces the supply bidding model of Holmberg (2009). Then current bidding of selected power plant in the Iranian electricity market compare with the optimal bidding. For this purpose, the demand uncertainty structure is estimated at the specified days in different seasons. Finally the optimal bids of Holmberg model are estimated. The results indicate that supply bids of the selected public power plant are suboptimal and can be improved by using the model. Alternative payment approach called uniform price can also be replaced to compare tow mechanisms

Suggested Citation

  • Moeeni, Shahram & Saffari, Babak & Sharifi, Alimorad & Hayati, Saeed, 2020. "Supply Bidding Analysis in the PAB Electricity Market of Iran Using Holmberg's Approach," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 6(4), pages 1-26, February.
    • Handle: RePEc:ris:qjatoe:0171
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    More about this item

    Keywords

    Electricity Market; Restructuring; Holmbergs Model; Pay as Bid Auction; Uniform Price Auction;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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