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Project information

Dynamic analysis of bidding strategies in wholesale electricity markets

A. Ramos J.M. Latorre

December 1999 - December 2002

Funding entity Ministerios (CICyT)

The objective of this project is to advance the theoretical developments and simulation procedures in order to be able to represent, understand and assess the behavior of the Spanish wholesale electricity market more fully. The project builds on two previous projects, together with CICyT financing. The first of these, (SEC96-0872) worked on the specification of marginal tariffs in the Spanish electricity sector, and the second, (SEC97-1281, still going on) was devoted to the design of long-term bidding strategies in a competitive electricity market. One year after the liberalization of the Spanish electricity sector, the day-ahead wholesale electricity market is becoming more stable. Agents have learned to bid and to determine their sale or purchase bids to increase profits. Changes in the market respond to the interaction of their strategies in the bidding process. This project proposes to establish the theoretical methodology and simulation tools in order to analyze the dynamic behavior of the electricity market, that is, to represent and reproduce the agents´ dynamic response to the behavior of other competitors. This will represent a further step towards understanding current and future market outcomes.