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Operator’s Bidding Strategies in the Liberalized Italian Power Market

In: Artificial Economics

Author

Listed:
  • Eric Guerci

    (GREQAM)

  • Mohammad Ali Rastegar

    (University of Genova)

  • Silvano Cincotti

    (GREQAM)

Abstract

This paper studies the Italian wholesale electricity market by means of a realistic agent-based computational model of the day-ahead market session, of the thermal-power production pool and of the Italian high-voltage transmission network. The aim of the paper is twofold. Firstly, it studies how the strategic behavior of the thermal power plants can influence the level of price at a national level. Secondly, it performs an empirical validation of the computational model over a period of one month which enables to assess the validity of the proposed model. In particular, three scenarios are studied and compared, i.e., the historical performance, a marginal cost based case and a strategic case where generation companies learn according to a reinforcement learning algorithm their best strategy. Results show that the strategic model reproduces real price dynamic during low- and medium- demand periods, whereas during peak-hours the strategic model tends to underestimate historical performances.

Suggested Citation

  • Eric Guerci & Mohammad Ali Rastegar & Silvano Cincotti, 2009. "Operator’s Bidding Strategies in the Liberalized Italian Power Market," Lecture Notes in Economics and Mathematical Systems, in: Cesáreo Hernández & Marta Posada & Adolfo López-Paredes (ed.), Artificial Economics, chapter 0, pages 53-66, Springer.
    • Handle: RePEc:spr:lnechp:978-3-642-02956-1_5
    DOI: 10.1007/978-3-642-02956-1_5
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