Double-Sided Energy Auction Equilibrium Under Price Anticipation

TL;DR

This paper analyzes equilibrium in double-sided energy auctions under price anticipation, proposing a modified auction to improve efficiency and examining surcharge impacts, supported by extensive simulations.

Contribution

It introduces a modified auction scheme to mitigate efficiency loss due to price anticipation and analyzes equilibrium with surcharge pricing in islanded energy systems.

Findings

Modified auction improves social welfare close to price-taking scenario

Equilibrium analysis under surcharge pricing reveals trade-offs between social welfare and revenue

Simulations validate theoretical predictions and effectiveness of proposed methods

Abstract

This paper investigates the problem of proportionally fair double sided energy auction involving buying and selling agents. The grid is assumed to be operating under islanded mode. A distributed auction algorithm that can be implemented by an aggregator, as well as a possible approach by which the agents may approximate price anticipation is considered. Equilibrium conditions arising due to price anticipation is analyzed. A modified auction to mitigate the resulting loss in efficiency due to such behavior is suggested. This modified auction allows the aggregate social welfare of the agents to be arbitrarily close to that attainable with price taking agents. Next, equilibrium conditions when the aggregator collects a surcharge price per unit of energy traded is examined. A biobjective optimization problem is identified that takes into account both the agents social welfare as well as the aggregator revenue from the surcharge. Results of extensive simulations, which corroborate the theoretical analysis, are reported.