Smart Grid Seminar

Electricity markets are the major instrument in balancing supply and demand, and are crucial for the stability of power systems. In decentralized electricity markets, the market coordinator, namely the independent system operator (ISO), elicits information from the energy suppliers about their cost functions, and dispatches the suppliers to minimize the total generation cost. However, the energy suppliers aim to maximize their own profit, and therefore may misreport their cost functions. Hence, the equilibrium of the market may be inefficient. In this talk, we will analyze the efficiency loss at the equilibrium of electricity markets. We focus on how the efficiency loss depends on the following two factors: the topology of the transmission network, and the suppliers' lack of information about the renewable energy generation and their opponents.