Market power detection and mitigation measures for the spot electricity market based on bidding equilibrium

• Published in: Energy (Oxford) Vol. 305; p. 132184
• Main Authors: Hu, Fei, Zhao, Yong, Huang, Cheng, Cui, Shichang, Ding, Qiang, Li, Yuanzheng
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.10.2024
• Subjects: Clearing price; consumer surplus; electricity; energy; exercise; Market power; markets; Mitigation measure; prices; Renewable energy generator; renewable energy sources; Spot electricity market; Mitigation measure; Market power; Clearing price; Renewable energy generator; Spot electricity market
• ISSN: 0360-5442
• DOI: 10.1016/j.energy.2024.132184

The spot electricity market (SEM) faces the challenge of inefficiency problems from market power (MP) abuse. However, previous studies have not adequately addressed such issues as the feasibility of MP mitigation measurements and authenticity of MP detection indicators. In this study, mitigation methods are developed, and MP detection indicators are designed to detect and mitigate the exercise of MP in an SEM in which multiple generators compete unilaterally through a uniform marginal clearing price mechanism. First, the incentives and general rules for rational generators to exercise their MP are analysed, providing theoretical support for the developed approaches. Then, two mechanisms that can mitigate the exercise of MP are devised by limiting the bid increase rate and maximising the consumer surplus. Furthermore, a behavioural detection indicator is designed to measure the MP of an individual generator, while an overall indicator is defined to assess the MP of an entire market. Finally, a joint clearing model is established to help implement the mechanism while promoting a high proportion of renewable energy consumption in the SEM. Case studies demonstrate the effectiveness and feasibility of the proposed approaches. •The necessary and sufficient conditions for electricity market bidding equilibria are given.•Two market power detection indicators for individuals and overall market are designed.•Two market power mitigation measures are proposed and their effectiveness is proved.•A joint clearing model is proposed for traditional and renewable energy generators.