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Modeling of Suppliers Learning Behaviors in an Electricity Market Environment

Author

Listed:
  • Yu, Nanpeng
  • Liu, Chen-Ching
  • Tesfatsion, Leigh S.

Abstract

The day-ahead electricity market is modeled as a multi-agent system with interacting agents including supplier agents, load-serving entities, and a market operator. Simulation of the market clearing results under the scenario in which agents have learning capabilities is compared with the scenario where agents report true marginal costs. It is shown that, with Q-learning, electricity suppliers are making more profits compared to the scenario without learning due to strategic gaming. As a result, the LMP at each bus is substantially higher. Related work can be accessed at: http://www2.econ.iastate.edu/tesfatsi/AMESMarketHome.htm Annotated pointers to related work can be accessed here: http://www2.econ.iastate.edu/tesfatsi/aelect.htm

Suggested Citation

  • Yu, Nanpeng & Liu, Chen-Ching & Tesfatsion, Leigh S., 2008. "Modeling of Suppliers Learning Behaviors in an Electricity Market Environment," Staff General Research Papers Archive 12976, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12976
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    References listed on IDEAS

    as
    1. Junjie Sun & Leigh Tesfatsion, 2007. "Dynamic Testing of Wholesale Power Market Designs: An Open-Source Agent-Based Framework," Computational Economics, Springer;Society for Computational Economics, vol. 30(3), pages 291-327, October.
    2. Severin Borenstein & James B. Bushnell & Frank A. Wolak, 2002. "Measuring Market Inefficiencies in California's Restructured Wholesale Electricity Market," American Economic Review, American Economic Association, vol. 92(5), pages 1376-1405, December.
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    More about this item

    Keywords

    Electricity market; Supplier modeling; Competitive Markov decision process; Q-learning;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D6 - Microeconomics - - Welfare Economics
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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