Action-based Electricity Resource Allocation Control Stratery Under A Hierarchical Structure

With the pace of electricity market reform, all aspects of the electricity sales have beengradually deregulated and become more competitive. How to design effective markettrading rules and the price mechanism has become an urgent problem. The auction theoryas a research focus in economics has been having a broad and deep development in recentyears. Applying the auction theory to the electricity market competition rules design mustbe able to add a new boost for electricity market reform.In this paper, by analyzing the characteristics of the structure of the electricity market,the feasibility of applying auction mechanism to solve the problem of power resourceallocation has been discussed. Hierarchical structure models of the electricity market havebeen established based on single-sided auction and doubel-sided auction respectively. In thehierarchical structure model of the electricity market, the retailers buy electricity resourcefrom generation provider and then sell it to buyers. In the process of resource allocation, theselfish behaviors of participants, in order to maximize their own interests, may causeinefficiencies in the whole electricity market. To avoid this situation, in this paper,progressive second price (PSP) auction mechanism has been applied to solve the problemof resource allocation and incentive participants to disclose true marginal cost or benefitfunction when submit their bids. Then the system determines a quantity of resource and thecorresponding payment to each participant. This paper designs a novel sequential dynamicalgorithm to implement the efficient Nash equilibrium (NE). Specifically, the resourceallocation problem over the whole hierarchical system is regarded as a distributedcollection of auction games. By employing a dynamic algorithm, each local systemconverges to its own efficient NE, at which the efficient resource allocation is achieved andthe bidding prices of all buyers in this local system are identical with each other. Based onthe results achieved in local systems, the quantities assigned to the suppliers are adjustedvia a dynamic hierarchical algorithm depending upon the implemented uniform biddingprice from the local systems. Such a recursive quantity process converges to an efficientallocation. Simulation results demonstrate that the hierarchical scheme can achieve an efficient allocation with fast converging rate.