(published PESGM09)Risk Analysis of Volume Cheat Strategy in a.pdfVIP

1 Abstract : Capacity market provides additional revenue stream for the power suppliers. In a capacity-energy combined market environment, suppliers have incentives to deliberately over-offer their capacities in the capacity market while bid very high price in the energy and ancillary markets to avoid operation. This paper analyzes the risks and profits of this capacity-over- offer behavior, and develops a method for computing non- operable penalty level which can prevent the capacity-over-offer behavior. It is found that the effective penalty level is highly correlated with the stocha