IDEAS home Printed from https://ideas.repec.org/p/isu/genres/13074.html
   My bibliography  Save this paper

Auction Basics for Wholesale Power Markets: Objectives and Pricing Rules

Author

Listed:
  • Tesfatsion, Leigh

Abstract

Power systems have distinctive features that greatly complicate the development of auction designs. This study reviews the theory and practice of auction design as it relates specifically to U.S. restructured wholesale power markets, i.e., centrally-administered wholesale power markets with congestion managed by locational marginal prices. Basic auction concepts such as reservation value, net seller surplus, net buyer surplus, competitive market clearing, market efficiency, market pricing rules, supply offers, demand bids, strategic capacity withholding, and market power are explained and illustrated. Complicating factors specific to wholesale power markets are clarified, and recent advances in computational tools designed to address these complications are briefly noted.

Suggested Citation

  • Tesfatsion, Leigh, 2009. "Auction Basics for Wholesale Power Markets: Objectives and Pricing Rules," Staff General Research Papers Archive 13074, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:13074
    as

    Download full text from publisher

    File URL: http://www2.econ.iastate.edu/papers/p6461-2009-07-01.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ioannidis, Filippos & Kosmidou, Kyriaki & Makridou, Georgia & Andriosopoulos, Kostas, 2019. "Market design of an energy exchange: The case of Greece," Energy Policy, Elsevier, vol. 133(C).
    2. Thomas, Auswin George & Tesfatsion, Leigh, 2017. "Braided Cobwebs: Cautionary Tales for Dynamic Retail Pricing in End-to-End Power Systems," ISU General Staff Papers 201707300700001028, Iowa State University, Department of Economics.
    3. Prokhorov, Oleksandr & Dreisbach, Dina, 2022. "The impact of renewables on the incidents of negative prices in the energy spot markets," Energy Policy, Elsevier, vol. 167(C).
    4. Villalobos, Cristian & Negrete-Pincetic, Matías & Figueroa, Nicolás & Lorca, Álvaro & Olivares, Daniel, 2021. "The impact of short-term pricing on flexible generation investments in electricity markets," Energy Economics, Elsevier, vol. 98(C).
    5. Li, Hongyan & Sun, Junjie & Tesfatsion, Leigh S., 2009. "Separation and Volatility of Locational Marginal Prices in Restructured Wholesale Power Markets," Staff General Research Papers Archive 13075, Iowa State University, Department of Economics.
    6. Dowling, Alexander W. & Kumar, Ranjeet & Zavala, Victor M., 2017. "A multi-scale optimization framework for electricity market participation," Applied Energy, Elsevier, vol. 190(C), pages 147-164.
    7. Heo, Deung-Yong Yong, 2015. "Studies on electric power markets: preparing for the penetration of renewable resources," ISU General Staff Papers 201501010800005377, Iowa State University, Department of Economics.
    8. Tesfatsion, Leigh, 2022. "Economics of Grid-Supported Electric Power Markets: A Fundamental Reconsideration," ISU General Staff Papers 202209141325510000, Iowa State University, Department of Economics.

    More about this item

    Keywords

    market power; Auction markets; power systems; design; efficency; pricing rules; agent-based test beds;
    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
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genres:13074. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.