2016/11/09 by Pier Giuseppe Sessa, Sessa, Pier Giuseppe, Neil Walton +3
Decision Sciences · Engineering · #Auction Theory and Applications #Computer Science and Game Theory (cs.GT) #Electric Power System Optimization #FOS: Computer and information sciences #Smart Grid Energy Management
paper · pdf · doi:10.48550/arxiv.1611.03044
openalex publication_date 2016/11/09 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Control reserves are power generation or consumption entities that ensure balance of supply and demand of electricity in real-time. In many countries, they are operated through a market mechanism in which entities provide bids. The system operator determines the accepted bids based on an optimization algorithm. We develop the Vickrey-Clarke-Groves (VCG) mechanism for these electricity markets. We show that all advantages of the VCG mechanism including incentive compatibility of the equilibria and efficiency of the outcome can be guaranteed in these markets. Furthermore, we derive conditions to ensure collusion and shill bidding are not profitable. Our results are verified with numerical examples.