Agent-Based Simulation of Wholesale Energy Markets: A Case Study on Renewable Generation

Abstract

Variable generation (VG), such as wind power, has increased significantly in recent years. VG has several unique characteristics compared to those of traditional power plants, including significant fixed capital costs but near-zero variable production costs. Large penetrations of VG tend to influence the prices and schedules of energy markets. Specifically, increasing levels of VG tend to reduce market prices, increase price volatility, and reduce the cleared energy levels of existing generating plants. This paper describes some important features of an agent-based system to simulate energy markets. Special attention is devoted to a case study aiming at analysing the behaviour of the system in situations with increasing levels of wind generation, notably comparing market schedules and prices in situations with either low or high levels of wind generation.