Bidding Strategies for Flexible and Inflexible Generation in a Power Market Simulation Model

This paper presents an electricity market simulation model that focuses on the distinction between flexible and inflexible generation, and formulates bidding strategies for capacities of either type. Bid formulation for flexible power plants, storage and demand response units at a control reserve market and an energy exchange market are described, and exemplary results from the simulation model are presented. It is shown that the simulation model can realistically reproduce market outcomes for the example of the German market zone, even for negative market prices. Results reveal that power plants could be deployed in a more flexible manner than it is actually done, where larger variations of output are avoided especially for nuclear and lignite-fired power plants. The model can be used for analyzing future energy scenarios of high shares of variable renewable energy (VRE), and help answering research questions related to the required system flexibility for balancing out VRE fluctuations.