Herding Behavior of Electricity Retailers in the Monthly Electricity Market: Model and Simulation

Abstract

With the reformulation of the electricity market in China, the electricity retailers can buy the electricity from the electricity market. Recently, herding behaviors in the electricity retailers are commonly observed when they bid in the monthly electricity market. The herding behaviors may bring many unstable risks to the electricity market. This paper mainly studies the impacts from the herding behaviors of electricity retailers on the monthly electricity market. We model the herding behavior model mathematically based on the relationship network of electricity retailers. Then the herding behavior model is imbedded into an electricity market model with agent-based bidding model based on reinforcement learning. We carry on a systematic simulation on MATLAB, and the simulation results illustrate that the herding behaviors might bring positive or negative effects to electricity retailers depending on different bidding strategies.