Bidding Strategies in Brazilian Electricity Auctions

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Bidding Strategies in Brazilian Electricity Auctions

Title Bidding Strategies in Brazilian Electricity Auctions
Author Erick M. Azevedo and Paulo B.Correia
Year 2006
Country Brazil
Type of Technology
Type of Document Research and development
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Language(s) English
Abstract Double bilateral contract auctions for electric energy purchase and sale occur in Brazil. These auctions present incomplete information and possess some subjectivity in relation to the future scenario of the Brazilian electric system, inserted in the agent’s bids. In this work, a model using Bayes’ rule and the game theory is proposed to aid the agent in its bid definition.

Through the existing relations between the Conditionalprobabilities of Bayes’ Rule, the model transforms beliefs into information.In this way, the absence of information is supplied and the problem is transformed into a game with complete information. The present study has no worries in terms of transmission constraints, since they are not usually considered in the bilateral contract auctions in Brazil. At the end, Nash equilibrium (NE) can be found through the expected payoff matrix of each agent.