Opportunities for Price Manipulation by Aggregators in Electricity Markets

TL;DR

This paper investigates how electricity aggregators might manipulate markets through strategic generation curtailment, especially in radial networks, highlighting potential profit increases and the complexity of detecting such behavior.

Contribution

It introduces algorithms for profit maximization via curtailment in radial networks and analyzes the potential for market manipulation by aggregators.

Findings

Efficient algorithms are available for radial network topologies.

Strategic curtailment can significantly increase aggregator profits.

Market manipulation risks are heightened in practical settings.

Abstract

Aggregators are playing an increasingly crucial role in the integration of renewable generation in power systems. However, the intermittent nature of renewable generation makes market interactions of aggregators difficult to monitor and regulate, raising concerns about potential market manipulation by aggregators. In this paper, we study this issue by quantifying the profit an aggregator can obtain through strategic curtailment of generation in an electricity market. We show that, while the problem of maximizing the benefit from curtailment is hard in general, efficient algorithms exist when the topology of the network is radial (acyclic). Further, we highlight that significant increases in profit are possible via strategic curtailment in practical settings.