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A Future Auction Mechanism for Distributed Generation

Author

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  • Thomas Greve

    (Energy Policy Research Group University of Cambridge)

  • Michael G. Pollitt

    (Energy Policy Research Group University of Cambridge)

Abstract

Auction designs in current electricity markets will need to be adjusted to cope with massively increased small-scale distributed generation and demand response, as these are integrated into the electricity system. We present a VCG mechanism that addresses the two most important challenges facing future power systems, namely uncertainty of costs and complexity of bidding strategies. The mechanism is built up around heterogeneous goods, useful for different levels of response time of electricity or different Quality of Service agreements, package bidding and a proxy agent. The proxy agent will ensure optimal bids from non-professional suppliers. Our mechanism has the expected desirable properties by design.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Thomas Greve & Michael G. Pollitt, 2016. "A Future Auction Mechanism for Distributed Generation," Working Papers EPRG 1629, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1629
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    References listed on IDEAS

    as
    1. Paul Joskow & Jean Tirole, 2007. "Reliability and competitive electricity markets," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 60-84, March.
    2. Thomas Greve & Michael G. Pollitt, 2016. "A VCG Auction for Electricity Storage," Working Papers EPRG 1613, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
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    8. Benjamin Edelman & Michael Ostrovsky & Michael Schwarz, 2007. "Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords," American Economic Review, American Economic Association, vol. 97(1), pages 242-259, March.
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    12. Thomas Greve & Charalampos Patsios & Michael G. Pollitt & Phil Taylor, 2016. "Economic zones for future complex power systems," Working Papers EPRG 1625, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Future electricity networks; electricity subscriptions; proxy agent; VCG auction mechanism;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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