Strategic bidding and rebidding in electricity markets

Clements, A.E., Hurn, A.S., & Li, Z. (2016) Strategic bidding and rebidding in electricity markets. Energy Economics, 59, pp. 24-36.

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Abstract

Successful deregulation in electricity markets depends crucially on the ability of market regulation to promote and maintain free competition. There are, however, important physical characteristics in electricity markets, such as the constraints imposed by the physical transmission infrastructure, that have the potential to undermine competition and provide opportunities for market participants to exploit temporary positions of market power. In this paper, the regional market of Queensland, Australia is analysed. It is found that strategic behaviour by generators exists and is closely related to the occurrence of the kind of extreme price events that characterise many deregulated electricity markets. In addition, rebidding behaviour by baseload generators immediately after extreme price events is shown to have negative impacts on the operation of the market. The key message is that promotion of competition in electricity markets can have undesirable consequences unless the regulatory policy is carefully designed to counter strategic behaviour by market participants.

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ID Code: 98362
Item Type: Journal Article
Refereed: Yes
Keywords: Electricity market, Transmission constraints, Synchronisation time, Ramp-up rate, Strategic bidding, Rebidding, Counter-price flow
DOI: 10.1016/j.eneco.2016.07.011
ISSN: 0140-9883
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
Copyright Owner: Copyright 2016 Elsevier
Copyright Statement: Licensed under the Creative Commons Attribution; Non-Commercial; No-Derivatives 4.0 International. DOI 10.1016/j.eneco.2016.07.011
Deposited On: 25 Aug 2016 05:15
Last Modified: 29 Nov 2016 04:23

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