Assessment of the collusion possibility and profitability in the electricity market: A new analytical approach

Abstract This paper proposes an analytical approach for evaluating the potential of collusion in the electricity market, based on the Jacobian matrix of GenCos’ profit. To develop the proposed approach, two lemmas are presented with their proof. In the first lemma, a general quadratic programming problem is decomposed. This lemma is employed to decompose the market variables, which are provided by solving the optimal power flow (OPF) problem. The second one is used to calculate the Jacobian matrix, analytically. Finally, four indices are introduced to evaluate the collusion possibility and profitability. These indices quantify both financial and capacity withholding of the GenCos. The proposed approach allows market regulator to assess the degree of competition in the electricity market. The simulation results on the IEEE 24-bus and 300-bus test systems demonstrate the efficiency of the proposed approach.

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