Supply Bidding Analysis in the PAB Electricity Market of Iran Using Holmberg's Approach

Document Type : Research Paper

Authors

1 Department of Economics, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

2 PhD student, Department of Statistics, University of Isfahan

Abstract

During the past few decades, governments around the world have been allowing market forces to play an increasing role in the electricity sector. The transition from the monopoly framework has led to the restructuring of the electricity market in leading economies to achieve greater competition and efficiency. Government of Iran also has been implemented a daily market for the competition of power plants in electricity sales based on supply bidding mechanism in order to guarantee reliability and efficiency. The basis of this mechanism is the Klemperer and Meyer (1989) study. This paper first introduces the supply bidding model of Holmberg (2009). Then current bidding of selected power plant in the Iranian electricity market compare with the optimal bidding. For this purpose, the demand uncertainty structure is estimated at the specified days in different seasons. Finally the optimal bids of Holmberg model are estimated. The results indicate that supply bids of the selected public power plant are suboptimal and can be improved by using the model. Alternative payment approach called uniform price can also be replaced to compare tow mechanisms.

Keywords

Main Subjects

References

  1. Bushnell, J., Mansur, E., & Saravia, C. (2008).  Vertical arrangements, market structure and competition: An analysis of restructured US electricity markets. American Economic Review, 98 (1), 237-66. 
  2. Downward, A., Philpott, A., & Ruddell, K. (2016). Supply function equilibrium with taxed benefits. Operation Research, 65(1), 161-179.
  3. Federico, G., & Rahman, D. (2003). Bidding in an electricity pay-as-bid auction. Journal of Regulatory Economics, 24(2), 175-211.
  4. Ghazizadeh, M., Rajabi Shahri, M., & Javidi, M.H. (2009). Iranian electricity market, history, reasons and features. Iranian Journal of Electrical and Electronic Engineering, 602, 33-22. (In Persian)
  5. Holmberg, P. (2008). Unique supply function equilibrium with capacity constraint. Energy Economics, 30, 148-172.
  6. Holmberg, P. (2009). Supply function equilibria of pay-as-bid auctions. Journal of Regulatory Economics, 36, 154-177.
  7. Kirschen, D., & Strbac, G. (2004). Fundamentals of power system economics, Wiley Online Library.
  8. Klemperer, P., & Meyer, M. (1989). Supply function equilibria in oligopoly under uncertainty. Econometrica, 57(6), 243-270.
  9. Khoshakhlagh, R., Sharifi, A., Emadzadeh, M., & Nazemi A. (2011). Estimation of market power in Iran's wholesale electricity market. Quarterly Journal of Economic Modeling Research, 1 (4), 56-31. (In Persian)
  10. Molaei, M.A., Manzoor, D., & Rezaei, H. (1391). Equilibrium price determination process in Iran's electricity market with a systemic dynamic approach. Quarterly Journal of Quantitative Economics, 9 (2), 86-71. (In Persian)
  11. Newbery, D., & Holmberg, P. (2010). The supply function equilibrium and its policy implications for wholesale electricity auctions. Utilities Policy, 18(4), 209-226.
  12. Pajouyan, J., Mohammadi, T., Bahrami, J., & Atbaei, F. (1393). A comparative study of the mechanism of auction on the market of electricity in Iran by the auction mechanism of the market fixing price, Quarterly Journal of Economic Research. 14 (53), 35-1. (In Persian)
  13. Ruddell, K. (2017). Supply function equilibrium in electricity markets. PhD thesis, University of Auckland.
  14.  www.isfahanps.ir 

Files

Share

How to cite

Statistics