Risk Analysis of Volume Cheat Strategy in a Competitive Capacity Market

Donghan Feng, Zhao Xu

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

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Abstract

Capacity market provides additional revenue stream for the power suppliers. In a capacity-energy combined market environment, suppliers have incentives to deliberately over-offer their capacities in the capacity market while bid very high price in the energy and ancillary markets to avoid operation. This paper analyzes the risks and profits of this capacity-over-offer behavior, and develops a method for computing non-operable penalty level which can prevent the capacity-over-offer behavior. It is found that the effective penalty level is highly correlated with the stochastic characteristics of the supplier's profit streams and attitudes towards risk. Two types of suppliers are identified with high potential of capacity cheating behavior in the analysis. The methodology and the results are potentially useful for regulating participants' misbehaviors and enhancing the operation security in a capacity-energy market environment.
Original languageEnglish
Title of host publicationIEEE Power & Energy Society General Meeting, 2009. PES '09.
PublisherIEEE
Publication date2009
Pages1-7
ISBN (Print)978-1-4244-4241-6
DOIs
Publication statusPublished - 2009
Event2009 IEEE Power and Energy Society General Meeting - Calgary, Canada
Duration: 26 Jul 200930 Jul 2009
http://ewh.ieee.org/cmte/PESGM09/

Conference

Conference2009 IEEE Power and Energy Society General Meeting
CountryCanada
CityCalgary
Period26/07/200930/07/2009
Internet address

Bibliographical note

Copyright: 2009 IEEE. Personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution to servers or lists, or to reuse any copyrighted component of this work in other works must be obtained from the IEEE

Cite this

Feng, D., & Xu, Z. (2009). Risk Analysis of Volume Cheat Strategy in a Competitive Capacity Market. In IEEE Power & Energy Society General Meeting, 2009. PES '09. (pp. 1-7). IEEE. https://doi.org/10.1109/PES.2009.5275804
Feng, Donghan ; Xu, Zhao. / Risk Analysis of Volume Cheat Strategy in a Competitive Capacity Market. IEEE Power & Energy Society General Meeting, 2009. PES '09.. IEEE, 2009. pp. 1-7
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abstract = "Capacity market provides additional revenue stream for the power suppliers. In a capacity-energy combined market environment, suppliers have incentives to deliberately over-offer their capacities in the capacity market while bid very high price in the energy and ancillary markets to avoid operation. This paper analyzes the risks and profits of this capacity-over-offer behavior, and develops a method for computing non-operable penalty level which can prevent the capacity-over-offer behavior. It is found that the effective penalty level is highly correlated with the stochastic characteristics of the supplier's profit streams and attitudes towards risk. Two types of suppliers are identified with high potential of capacity cheating behavior in the analysis. The methodology and the results are potentially useful for regulating participants' misbehaviors and enhancing the operation security in a capacity-energy market environment.",
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Feng, D & Xu, Z 2009, Risk Analysis of Volume Cheat Strategy in a Competitive Capacity Market. in IEEE Power & Energy Society General Meeting, 2009. PES '09.. IEEE, pp. 1-7, 2009 IEEE Power and Energy Society General Meeting, Calgary, Canada, 26/07/2009. https://doi.org/10.1109/PES.2009.5275804

Risk Analysis of Volume Cheat Strategy in a Competitive Capacity Market. / Feng, Donghan; Xu, Zhao.

IEEE Power & Energy Society General Meeting, 2009. PES '09.. IEEE, 2009. p. 1-7.

Research output: Chapter in Book/Report/Conference proceedingArticle in proceedingsResearchpeer-review

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PY - 2009

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Feng D, Xu Z. Risk Analysis of Volume Cheat Strategy in a Competitive Capacity Market. In IEEE Power & Energy Society General Meeting, 2009. PES '09.. IEEE. 2009. p. 1-7 https://doi.org/10.1109/PES.2009.5275804