Analysis on bidding strategy of power provider by game theory

In oligopoly competition electricity market, bidding strategy and utility of market participants interact each other, that means any change of bidding made by one market participant will influence the strategy and utility of all other market participants. It is the characteristics of gaming between market participant and incomplete information of opponents that make incomplete-information static game theory an important tool in analyzing behavior of market participants and forecasting tendency of electricity market. According to research on electricity market, this paper introduced a general method of bidding strategy analyzing and equilibrium strategy combination solving of electricity market by incomplete-information static game theory, and present the arithmetic for equilibrium strategy solving of domestic electricity market marked by open mainly in generation side. Then given an example of two power providers in electricity market and calculated the equilibrium bidding strategy. Calculation results indicate that the analysis method presented in paper was consistent with actual operation of electricity market and could interpret the bidding behavior of market participants. © 2006 IEEE.