Analyses on market power in reactive electricity markets employing the agent-based simulation

Market power in a potential reactive electricity market at planning and design stage has been regarded as a vital problem for its negative effect on the efficient operation of the market. Up to now, research work on the evaluation index for market power in the reactive electricity market has been mainly based on technical characteristics of a power system, and the strategic bidding behavior of market participants is not taken into account. Given this background, an agent-based market simulation framework is presented for analyzing the gaming behaviors of reactive power suppliers and the resulting market power of participants. The replicator dynamics algorithm is utilized to simulate the agents' rational behavior for profit maximization. Two mathematical models, in which the mandatory reactive power requirement is not/is imposed for reactive power suppliers, are respectively developed for describing the uniform-price auction and pas-as-bid (PAB) auction in a reactive electricity market. The market power is then analyzed by employing the well-known price cost margin index. The CIGRE 32-bus system is used for numerical studies. Simulation results demonstrate the essential features of the developed model and method, and that reactive market power in the uniform-price auction is more significant than that in the PAB auction.