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Dynamic Testing of Wholesale Power Market Designs: An Open-Source Agent-Based Framework

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  • Sun, Junjie
  • Tesfatsion, Leigh

Abstract

In April 2003 the U.S. Federal Energy Regulatory Commission proposed a complicated market design – the Wholesale Power Market Platform (WPMP) – for common adoption by all U.S. wholesale power markets. Versions of the WPMP have been implemented in New England, New York, the mid-Atlantic states, the Midwest, the Southwest, and California. Strong opposition to the WPMP persists among some industry stakeholders, however, due largely to a perceived lack of adequate performance testing. This study reports on the model development and open-source implementation (in Java) of a computational wholesale power market organized in accordance with core WPMP features and operating over a realistically rendered transmission grid. The traders within this market model are strategic profit-seeking agents whose learning behaviors are based on data from human-subject experiments. Our key experimental focus is the complex interplay among structural conditions, market protocols, and learning behaviors in relation to short-term and longer-term market performance. Findings for a dynamic 5-node transmission grid test case are presented for concrete illustration.

Suggested Citation

  • Sun, Junjie & Tesfatsion, Leigh, 2007. "Dynamic Testing of Wholesale Power Market Designs: An Open-Source Agent-Based Framework," ISU General Staff Papers 200701010800001249, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genstf:200701010800001249
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    References listed on IDEAS

    as
    1. Koesrinartoto, D. & Sun, Junjie & Tesfatsion, Leigh, 2005. "An agent-based computational laboratory for testing the economic reliability of wholesale power market designs," ISU General Staff Papers 200501010800001043, Iowa State University, Department of Economics.
    2. Paul L. Joskow, 2006. "Markets for Power in the United States: An Interim Assessment," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-36.
    3. Widergren, S. & Sun, Junjie & Tesfatsion, Leigh, 2006. "Market design test environments," ISU General Staff Papers 200601010800001042, Iowa State University, Department of Economics.
    4. James Nicolaisen & Valentin Petrov & Leigh Tesfatsion, 2000. "Market Power and Efficiency in a Computational Electricity Market with Discriminatory Double-Auction Pricing," Computational Economics 0004005, University Library of Munich, Germany.
    5. Sun, Junjie & Tesfatsion, Leigh, 2006. "DC Optimal Power Flow Formulation and Solution Using QuadProgJ," Working Papers 18221, Iowa State University, Department of Economics.
    6. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
    7. Tesfatsion, Leigh & Judd, Kenneth L., 2006. "Handbook of Computational Economics, Vol. 2: Agent-Based Computational Economics," Staff General Research Papers Archive 10368, Iowa State University, Department of Economics.
    8. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, University Library of Munich, Germany, revised 15 Aug 2002.
    9. Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
    10. Leigh Tesfatsion & Kenneth L. Judd (ed.), 2006. "Handbook of Computational Economics," Handbook of Computational Economics, Elsevier, edition 1, volume 2, number 2.
    11. Sun, Junjie & Tesfatsion, Leigh S., 2007. "Open-Source Software for Power Industry Research, Teaching, and Training: A DC Optimal Power Flow Illustration," Staff General Research Papers Archive 12775, Iowa State University, Department of Economics.
    12. Axelrod, Robert & Tesfatsion, Leigh, 2006. "A Guide for Newcomers to Agent-Based Modeling in the Social Sciences," Staff General Research Papers Archive 12515, Iowa State University, Department of Economics.
    13. Paul Windrum & Giorgio Fagiolo & Alessio Moneta, 2007. "Empirical Validation of Agent-Based Models: Alternatives and Prospects," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 10(2), pages 1-8.
    14. Bower, John & Bunn, Derek, 2001. "Experimental analysis of the efficiency of uniform-price versus discriminatory auctions in the England and Wales electricity market," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 561-592, March.
    15. Sun, Junjie, 2005. "U.S. Financial Transmission Rights: Theory and Practice," Staff General Research Papers Archive 12266, Iowa State University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    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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