Impacts of emission trading and renewable energy support schemes on electricity market operation

Abstract

In order to mitigate Greenhouse Gas emissions, emission trading and renewable energy support schemes have been or are going to be implemented in some developed countries or regions. Inevitably, the implementation of these two schemes would bring some new problems to electricity market operation. Given this background, with the implementation of these two schemes, an agent-based market simulation method is proposed in this study for analysing the gaming behaviours of generation companies in an electricity market environment. Replicator dynamics algorithm is employed to simulate the bidding strategies of agents (generation companies) for profit maximisation. The operation process of a specified electricity market is simulated over a studied time horizon and some indices are employed to evaluate the market operation performance. A numerical example is served for demonstrating the feasibility of the proposed model and methodology. The impacts of the two schemes on the electricity market operation are examined through the comparisons of the indices in different scenarios.