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Energies 2015, 8(1), 257-277; doi:10.3390/en8010257

Determining the Interruptible Load with Strategic Behavior in a Competitive Electricity Market

School of Electrical Engineering & Computer Science, Seoul National University, Gwanak-ro 599, Gwanak-gu, Seoul 151-744, Korea
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Academic Editor: Wei-Chiang Hong
Received: 29 September 2014 / Accepted: 24 December 2014 / Published: 30 December 2014
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Abstract

In a deregulated market, independent system operators meet power balance based on supply and demand bids to maximize social welfare. Since electricity markets are typically oligopolies, players with market power may withhold capacity to maximize profit. Such exercise of market power can lead to various problems, including increased electricity prices, and hence lower social welfare. Here we propose an approach to maximize social welfare and prevent the exercising of market power by means of interruptible loads in a competitive market environment. Our approach enables management of the market power by analyzing the benefit to the companies of capacity withdrawal and scheduling resources with interruptible loads. Our formulation shows that we can prevent power companies and demand-resource owners from exercising market powers. The oligopolistic conditions are described using the Cournot model to reflect the capacity withdrawal in electricity markets. The numerical results confirm the effectiveness of proposed method, via a comparison of perfect competition and oligopoly scenarios. Our approach provides reductions in market-clearing prices, increases in social welfare, and more equal distribution of surpluses between players. View Full-Text
Keywords: electricity market; demand response; interruptible and curtailable load; market efficiency; market power; social welfare maximization; Cournot equilibrium electricity market; demand response; interruptible and curtailable load; market efficiency; market power; social welfare maximization; Cournot equilibrium
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Yoo, T.H.; Park, H.; Lyu, J.-K.; Park, J.-K. Determining the Interruptible Load with Strategic Behavior in a Competitive Electricity Market. Energies 2015, 8, 257-277.

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