A Study of Central Auction Based Wholesale Electricity Markets

The deregulation of electricity markets produced significant economic benefits, reducing prices to customers and opening several opportunities for new actors, e.g., new generators and distributors. A prominent scientific and technological challenge is the automation of such markets. In particular, we focus our attention on wholesale electricity markets based on a central auction. In these markets, generators sell electricity by means of a central auction to a public authority. Instead, the distribution of electricity to customers takes part in retail markets. The main works presented in the literature model wholesale markets as oligopolies, neglecting thus the specific auction mechanism. In this paper, we enrich these models by introducing an auction mechanism shaped on that used in the Italian wholesale electricity market, we solve the winner determination problem, and we preliminarily study the problem of searching for equilibria.