Indian power market
Indian power market development trend
Bidding in electricity market
Market clearing price
Outcomes of literature review
Present Power System
- Heavily Relying on Fossil
- Generation follows load
- Limited ICT use
- Limited Competition
Future Power System
- More use of RES, clean
coal, nuclear power
- Load follows Generation
- More ICT & Smart meter
- More competition
Prior to the enactment of Electricity Act 2003 there was a
monopoly of government.
A single entity I.e. government was taking care of all
electricity business such as generation, transmission
Continued power shortages, poor operational
performance and precarious financial situation of SEBs.
After passing of Electricity Act 2003,the
competition came to the forefront, both
government and private companies have
jurisdiction over it.
De-licensing of thermal generation including
Non-discriminatory open access in transmission.
Deregulation comes into the picture
Deregulation is the process of removing or reducing state regulations. It is
therefore opposite of regulation, which refers to the process of the
government regulating certain activities.
The basic idea of restructuring includes introducing competitive energy
markets, unbundling electricity services and opening access to the network.
The objective of restructuring is to provide better options for industrial
contributors and to introduce revolutions with improved quality service and
choice to the customers at economical prices
Energy prices are not regulated in these deregulated areas and consumers
are not forced to receive supply from their utility.
Deregulation allows competitive energy suppliers to enter the
Deregulation gives consumers choice - the power of the buyer. A
deregulated market allows you to choose your commodity supplier.
Restructuring comprises different activities; changing existing
companies corporation, privatization and dissociation
With the introduction of restructuring into the electric
power industry, the price of electricity has become the
focus of all activities in the power market.
The objective of transmission pricing is to recover all or
part of the existing and new cost of transmission system.
The pricing of the transmission service must meet the
Promote economic efficiency.
Compensate grid companies fairly for providing
Allocate transmission cost reasonably among all
Maintain the reliability of transmission grid.
◦ Let genenerator-1 has capacity of 100 MW with production
cost $75/MW per unit time. Demand is 100 MW. Bid of other
gen at the same bus is
What should be bid of gen-1?
Option-1: bid at 100 $/MW
◦ win all demand of 100 MW. The profit will be 100(100-75)= 2500
Option-2: bid at 120 $MW
◦ win 50 MW capacity. The profit will be 50(120-75)= 2250
This shows the option-1 is preferred.
If second block of other gen. is 131 $/MW. Profit at bid price of
130 will be 50(130-75) = 2750.
◦ Now this is preferred.
50 MW 101 $/MW
50 MW 121 $/MW
BIDDING STRATEGY IN ELECTRICITY MARKETS
Theoretically, in perfect electricity markets, suppliers should bid at or very
close to their marginal cost to maximize profit.
However, the electricity market is not perfectly competitive due to limited
number of producers, therefore, power suppliers may seek to benefit by bidding
a price higher than the marginal production cost.
When a supplier bids other than the marginal cost, to take advantages of
imperfect market to increase their profit, this behavior is called strategic
The bidding strategy decision of an individual supplier can be affected by
demand variation, generator cost characteristic, rivals bidding behavior,
operating and regulatory constraints.
Each supplier developed bidding strategy to maximize their profit, considering
own costs and constraints, rivals' bidding behavior and market rules.
Transmission constraints restricts the flow of power from low
cost node to high value nodes.
Since transmission network capacity is limited, it may happen
necessary to select expensive bid to avoid transmission
overloading. Therefore, constraints on the system will cause
different prices at different nodes.
Revenue collected from the consumer will be more than the
money paid to the generators in uniform market clearing price
The market based congestion management methods can be
Locational marginal price
Counter flow re-dispatch
BIDDING IN CONSTRAINED NETWORK
BIDDING STRATEGIES FORMULATIONS
1. Deterministic formulation
• Uncertainty are not included
• No temporalities
• All rivals are clubbed together
2. Stochastic formulation
•Uncertainty of bid price of
•Uncertainty of demand
•Temporalities are considered
•Rivals’ are not clubbed
Bidding problem formulation depends upon the market model, type of bidding
protocol, auction mechanism and estimation technique of rivals’ bidding behavior.
1. Conventional methods
2. Heuristic approaches
Bidding is an offer (often competitive) of setting a
price one is willing to pay for something or a
demand that something be done. A price offer is
called a bid.
Buying or selling of energy takes place in
the form of bids
• Agents submit bids (Quantity and cost) to either buy or sell
• Independent System Operator (ISO) matches the bids
• Bids below MCP are
• Two types of payments
i) Uniform pricing
ii) Pay as bid
Strategic bidding:Aim is to construct best optimal bid knowing their
own costs, technical constraints and their expectation of rival and
 This paper reviews the changes brought about
by the new act The Electricity Act 2003 and
analyses whether the new act would be sufficient
to transform the Indian power sector.
 this paper reviews about market clearing price
and power dispatch of generators.
in this paper discussed about the issues
involved in introduction of competition in the
power sector primarily through development of a
market for bulk power.
 A brief literature survey of strategic
bidding in electricity markets is made in this
this paper provides an overviews of the
status of competition in various segments of
the power system.
 This paper analyses a comprehensive
literature on the state of the art research of
bidding strategies in restructured electric
RESEARCH TOPIC PROBLEMS
M. Prabavathi & R.
Bidding strategies for
MCP & contribution of
generators but without
S. Soleymani, A.M.
Ranjbar, & A.R. Shirani
Strategic bidding of
generating units in
electricity market with
Used for simple
Determination of MCP and contributions of
generator from their bids having many
generators and many loads with variable
demands using double sided auction,
considering the constraints also.
Deregulation introduces competition in
electricity Power Market.
Private players comes into picture,
advantageous for customers.
Bidding in Day-Ahead Electricity (DAM)
Markets and Term Ahead Market(TAM) is to
How the Power will dispatch of generators in
the competitive environment.
FEB-MAR •Final ppt
 Bhattacharyya, S.C., 2005. The Electricity
Act 2003: will it transform the Indian power
sector? Utilities Policy 13 (3) 260–27
 M.Prabavathi, R.Gnanadass “Bidding
Strategies for Indian Restructured power
Market” (ICCPCT-2013),IEEE transactions pp.
Anoop Singh “power sector reform in India:
current issues and prospects”,Energy Policy
34 (2006) 2480-2490.
 A.K.David Fushuan Wen,” Strategic Bidding in
Competitive Electricity Markets: a Literature
Survey”, Proceedings of 2000 PES Summer Power
Meeting, vol.4, pp.2168-2173, 2000
Anoop Singh “Towards a competitive market
for electricity and consumer choice in the Indian
power sector”, Energy policy 38 (2010) 4196-
 M. Prabavathi, R. Gnanadass “Energy bidding
strategies for restructured electricity market”
Electrical Power and Energy Systems 64 (2015)