Auctions in the Electricity Market

  • Stefan Schöne

Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 617)

Table of contents

  1. Front Matter
    Pages i-xvi
  2. Pages 1-5
  3. Pages 7-20
  4. Pages 21-40
  5. Pages 41-203
  6. Pages 205-208
  7. Back Matter
    Pages 209-218

About this book


Electricity is an essential commodity traded at power exchanges. Its price is very volatile within a day and over the year. This raises questions about the efficiency of the trading rules.

The author develops a non-cooperative auction model analyzing the bidding behavior of producers at power exchanges. Producers are limited by the production capacity of their power plants. Production costs are affiliated. This allows for independence or positive correlation. The author analyzes and compares a uniform-price, a discriminatory, and a generalized second-price auction. Optimal bids, cost efficiency, profits, and consumer prices are examined. A simple probability density function of affiliated production costs is given and used for examples. Numerical results are presented.

The results of the analysis can help improving the bidding strategies of producers, selecting the best auction type at power exchanges or detecting price manipulations.


Bidding Electricity Spot Market Multi-Unit Auctions Power Exchange Production Capacity Constraints linear optimization production

Editors and affiliations

  • Stefan Schöne
    • 1
  1. 1.Humboldt-Universität zu Berlin School of Business and EconomicsInstitute of FinanceBerlinGermany

Bibliographic information

  • DOI
  • Copyright Information Springer Berlin Heidelberg 2009
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Business and Economics
  • Print ISBN 978-3-540-85364-0
  • Online ISBN 978-3-540-85365-7
  • Series Print ISSN 0075-8442
  • Buy this book on publisher's site
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