Gaming in the Electricity Market

Exhibitor: Audrey Koy

Supervisor: Zhao Dong

Research Group: Complex and Intelligent Systems

Industry Sector: Energy and Utilities

The first theorem of game theory asserts that in chess either white can force a win, or black can force a win, or both sides can force at least a draw. This 'theorem' was published by Ernst Zermelo in his paper Uber eine Anwendung der Mengenlehre auf die Theorie des Schachspiels in 1913 and hence is referred to as Zermelo's Theorem. Gaming theory has since evolved to be applicable to our day to day life and more recently in complex modern analysis, particularly to our interest, Gaming in Electricity Market. With the recently liberalization of the Electricity Market in many developed countries like Australia, Electricity Market has taken on a whole new meaning. There is now a fluctuating unpredictable market environment, but most importantly it introduces competition and eliminated monopoly. Therefore there is a need within the industry to foresee the market and gain an edge over competitors.

The objective of this thesis is to suggest techniques to prevent other possible ways that generators could obtain profit maximization in the case of contingencies and expansion. In order to achieve the above mentioned objectives, investigation of wide range of opportunities that the generators could benefit from upon restructuring to a competitive environment. Simulation of the data is essential so as to prevent market power and having extraordinary high price signals in the electricity market, thus creating a competitive market. All simulated results will be analyzed with the application of the economic game theory in order to identify the prices and power domination of the generators. The simulation results can be achieved based on a twelve-bus model designed from Power World® and using Matlab®.

The Power World® provides a method of simulating the market concentration using one of the most common means for measuring market power is the Herfindahl-Hirschman Index (HHI). Matlab®, on the other hand, provides a method of electricity simulation by performing the optimal power flow (OPF) of the power system.