Dynamic Game Model for Deregulated Electricity Markets Considering the Ramp Rate Constraints

Abstract

In this paper, we investigate how generators' ramp rate constraints may influence generators' equilibrium strategy formulation. In the market model, generators' ramp rate constraints are explicitly represented. In order to fully characterize the inter-temporal nature of the ramp rate constraints, a dynamic game model is presented. The subgame perfect Nash equilibrium is adopted as the solution of the game and the backward induction procedure is designed. Due to the inter-temporal nature of the ramp rate constraints, the subgame perfect Nash equilibrium strategy should be a Markov strategy. This, in turn, suggests that the subgame perfect Nash equilibrium of the proposed game should be characterized as the Markov perfect equilibrium. Finally, two examples including a simple discrete strategy example and a numerical illustration of applying the proposed approach are presented.