Strategic Bidding Behavior Analysis With Truthfully Modeled Generator Output Range

As the foundation of electricity market, the design of the pricing mechanism can significantly influence the bidding behavior of market participants and thereby affect market performance. Hence, analyzing the behavior of market participants and the potential market clearing results under alternative pricing mechanisms is crucial for evaluating and recommending pricing mechanisms. In this paper, we compare and analyze the strategic bidding characteristics of generators with truthfully modeled output ranges and corresponding market-clearing outcomes under both pay-as-bid pricing (PABP) and locational marginal pricing (LMP) mechanisms. First, we formulate bi-level strategic bidding problems under these two pricing mechanisms, explicitly considering generators' minimum output constraints. Second, based on theoretical derivation, we show that the generator's minimum output significantly impacts the comparative conclusion between two pricing mechanisms, which is commonly neglected by existing studies. Third, based on the duality theory, we introduce the solution method for strategic bidding problems. Then, considering the minimum output of the generator, the quantitative analysis of consumer payment and system operational cost under two pricing mechanisms is summarized. Finally, numerical analyses reveal new insights into the comparative properties between the two pricing mechanisms.