This paper proposes a methodology for determining the optimal bidding strategy of a retailer who supplies electricity to end-users in the short-term electricity market. The aim is to minimize the cost of purchasing energy in the sequence of trading opportunities that provide the day-ahead and intraday markets. A genetic algorithm has been designed to optimize the parameters that define the best purchasing strategy. The proposed methodology has been tested using real data from the Spanish day-ahead and intraday markets over a period of two years with a significant cost reduction with respect to trading solely in the day-ahead market.

Extensive literature is available for modeling and simulating local electricity markets, often called P2P electricity markets, and for pricing local energy transactions in energy communities. Market models and pricing mechanisms provide simulation tools to better understand how these new markets behave, helping to design their main rules for real applications, and assessing the financial compensations of the internal energy transactions. As such, pricing mechanisms are often needed in energy management systems when centralized management approaches are preferred to market-based ones. First, this paper highlights the links between local electricity markets, pricing mechanisms for local electricity transactions, and other approaches to sharing the collective benefits of participating in transactive energy communities. Then, a standard nomenclature is defined to review some of the main pricing mechanisms for local energy transactions, an innovative pricing mechanism based on the economic principles of a post-delivery pool market is proposed, and other relevant approaches for local electricity market simulation such as Nash equilibrium or agent-based simulation are also revisited. The revision was based on systematic searches in common research databases and on the authors’ experience in European and national projects, including local industrial applications for the past five years. A qualitative assessment of the reviewed methods is also provided, and the research challenges are highlighted. This review is intended to serve as a practical guide to pricing mechanisms and market simulation procedures for practical designs of internal financial compensation to share the collective benefits of energy communities.

Electricity markets based on simple bids provide a very high degree of transparency and simplicity. However, simple bids fail to capture many well-known characteristics of generating units and, therefore, the responsibility for obtaining feasible schedules is transferred to market participants. The purpose of this paper is to help the generating utility to automatically analyze the last energy program cleared in the market and, in case this program is technically unfeasible, to provide an alternative schedule by re dispatching the generating units. This is achieved by formulating an optimization problem where the objective is to find the cheapest and feasible instantaneous power trajectory of each generator, trying to minimize the differences between its hourly average values and the last energy program. As the objectives of the utility can vary during the day, three different models are presented. Two of them are formulated as a joint energy and reserve dispatch in order to take into account possible commitments acquired in the ancillary services market of AGC regulation. In this sense, a novel approach for considering discontinuous ancillary regulation curves is proposed. Some numerical examples are included to illustrate the essential features of the models.

Electricity markets are based on several sequential energy and reserve trading mechanisms to constantly maintain the balance between generation and demand. During the last years, reserve markets are getting much importance all around the world with the increasing social awareness of the renewable energy benefits. Additional reserve quantities and larger remunerations are being implemented by the regulators since this renewable energy is highly dependent on weather conditions uncertainties. Utilities are therefore demanding more and more powerful models to better optimize their reserve bidding curves to be sent to the system operators. This paper describes a new methodology to obtain an optimized real bidding curve for the secondary (spinning) reserve market. The approach is based on the maximization of a company profit, assuming a set of residual demand curves scenarios for its competitors' representation, and considering the day-ahead market opportunity cost to build the reserve cost curve. The case study validates the main features of the proposed methodology by its application to the Spanish secondary reserve market. This methodology is being daily used by one of the most important electricity companies in Spain.