2002 | OriginalPaper | Chapter
On Supply Function Bidding in Electricity Markets
Authors : Edward J. Anderson, Andrew B. Philpott
Published in: Decision Making Under Uncertainty
Publisher: Springer New York
Included in: Professional Book Archive
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We consider wholesale electricity market pools in which generators must offer supply functions that are centrally dispatched. Each generator seeks a supply function to offer to the spot market, so as to maximise expected return. We give conditions under which a supply function exists that optimises return for every demand realisation. We also analyse the case in which the behaviour of the competition can be modelled by an appropriate probability distribution, and derive optimality conditions for the optimal supply-function offer in this case. The paper concludes with some remarks on applying the theory to the case where each generator must offer a limited number of prices in their stack.