Abstract:

“Electricity bidding on the grid” is the basic condition for the electricity industry to achieve market-oriented operation， and the bidding mechanism design is an important topic that needs to be discussed in deepening the reform of the electricity market. The existing theory and practice show that uniform price auction （UPA） and discriminatory price auction （DPA） are the two main bidding mechanisms usually used in electricity market transactions. Then， based on the commodity attributes and industry characteristics of electricity， a discrete multi-item auction model framework is adopted to model the transaction mechanism of electricity bidding on the grid.First， a benchmark model of duopoly is established， considering that there are two power generation companies with asymmetric production capacity and marginal cost “single-goods” quotation function. The equilibrium bidding behavior of power generation companies is depicted under the UPA and DPA mechanisms， and they are compared from the expected revenue and production efficiency. Then， considering more realistic situations， the model is expanded from aspects of multivariate oligopoly， multi-unit quotation， more flexible demand function and longer quotation interval， and the following conclusions are obtained：（i） The equilibrium quotation of power generation manufacturers depends on the state of demand： In the state of low demand， the market equilibrium price under the two mechanisms does not exceed the marginal cost of the maximum efficiency generator that has not been invoked； in the state of high demand， there are multiple pure strategy equilibriums under the UPA mechanism； and a mixed strategy equilibrium under DPA mechanism. （ii） The comparison of the expected revenue is affected by the quotation interval： when the demand is determined （the quotation period is short）， compared with the UPA mechanism， the power generation company obtains a lower revenue under the DPA； Under the situation of uncertain demand （long quotation period）， symmetrical power generation companies face the same expected return under the two mechanisms. （iii） The comparison of the UPA and DPA mechanisms in terms of production efficiency is not clear， which depends on the model parameters and the choice of multiple pure strategy equilibrium under the UPA mechanism.It attempts to use the auction theory framework to model the power market bidding online. By comparing the market performance of the two bidding mechanisms， the boundary conditions for mechanism design and selection are obtained. It is hoped that these conclusions will provide a theoretical basis and decision-making reference for improving the design of the power market bidding online transaction mechanism and deepening the power system reform in China.

Key words: bidding trading, auction design, uniform price, discriminatory price