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Comparing system-marginal-price versus pay-as-bid auctions in a realistic electricity market scenario

In: Managing Market Complexity

Author

Listed:
  • Eric Guerci

    (D.I.E.M. at University of Genoa)

  • Mohammad Ali Rastegar

    (MBE Group at Amirkabir University of Technology)

Abstract

A realistic agent-based computational model of the day-ahead market session of the Italian wholesale electricity market is simulated to compare market performances between system-marginal-price and pay-as-bid clearing mechanisms. An empirical validation of computational results at a macro-level is performed to test for accuracy of simulated outcomes with historical ones. The level of prices are accurately reproduced except for few peak hours. As far as concerns pay-as-bid auction, the computational experiments point out that it results in higher market prices than the system-marginal-price auction. In the pay-as-bid mechanism, sellers’ endeavours to maximize their profits are more costly thus leading to higher price levels

Suggested Citation

  • Eric Guerci & Mohammad Ali Rastegar, 2012. "Comparing system-marginal-price versus pay-as-bid auctions in a realistic electricity market scenario," Lecture Notes in Economics and Mathematical Systems, in: Andrea Teglio & Simone Alfarano & Eva Camacho-Cuena & Miguel Ginés-Vilar (ed.), Managing Market Complexity, edition 127, chapter 0, pages 141-153, Springer.
    • Handle: RePEc:spr:lnechp:978-3-642-31301-1_12
    DOI: 10.1007/978-3-642-31301-1_12
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    Cited by:

    1. Wang, Yi & Yang, Zhifang & Yu, Juan & Liu, Junyong, 2023. "An optimization-based partial marginal pricing method to reduce excessive consumer payment in electricity markets," Applied Energy, Elsevier, vol. 352(C).

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