Journal
IEEE TRANSACTIONS ON POWER SYSTEMS
Volume 34, Issue 4, Pages 2846-2858Publisher
IEEE-INST ELECTRICAL ELECTRONICS ENGINEERS INC
DOI: 10.1109/TPWRS.2019.2901249
Keywords
Electricity market; incentive-compatibility; stochastic market-clearing; Vickrey-Clarke-Groves; budget imbalance redistribution
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Funding
- Belgian Energy Transition Fund [EPOC 2030-2050]
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A major restructuring of electricity markets takes place worldwide, pursuing maximum economic efficiency. In most modern electricity markets, including the widely adapted Locational Marginal Price (LMP) market, efficiency is only guaranteed under the assumption of perfect competition. Moreover, market design is heavily focused on deterministic conventional generation. Electricity markets, though, are vulnerable to strategic behaviors and challenged by the increased penetration of renewable energy generation. In this paper, we cope with the aforementioned bottlenecks by investigating the application of Vickrey-Clarke-Groves (VCG) auction in a two-stage stochastic electricity market. The VCG mechanism achieves incentive-compatibility by rewarding market participants for their contribution towards market efficiency, being attractive from both market operation and participants perspectives. Both traditional and VCG market-clearing approaches are explored and compared, investigating as well the impact of increasing wind power penetration. The main shortcoming of VCG, i.e., not ensuring revenue adequacy, is quantified in terms of market budget imbalance for various levels of wind power penetration. To this end, a novel ex-post budget redistribution scheme is proposed, which achieves to partially recover budget deficit.
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