An efficient electricity market determines the operational mechanisms to maintain long-term and short-term power system reliability in a least-cost manner. The performance of the market not only depends on the market structure, but also the bidding mechanisms of the market participants including various generation resources, smart consumers and financial players. Our goal is to study and improve the bids in electricity market with focus on the California energy market. Therefore, in this thesis, a comprehensive analysis on the real bidding data from California electricity market has been done. It is concluded that compared to the supply side, the demand side in the California market is currently highly inelastic, leading to many undesirable consequences such as price spikes and exercising market power by generation companies.
To address such issues, a new demand bidding framework has been proposed that recognizes the special characteristics of smart loads. The bids in this framework are called extended-time demand bids. The new framework resolves the problems of accommodating smart loads in the electricity market such as market instability and lack of equilibrium. Moreover, a novel strategy for large smart loads to procure their required energy in electricity market has been introduced. The proposed strategy is general and can be applied to both basic and complex smart load types.
Finally, the performance of financial players bids known as Convergence Bids (CBs) have been studied. While CBs are designed to improve the market efficiency and decrease the price gap between day-ahead and real-time markets, there are recently serious concerns where CBs do not act as intended and their performance even result in decreasing market efficiency. Accordingly, we built an analytical foundation to explain under what conditions placing a CB at a bus in a nodal electricity market can decrease (increase) market efficiency. Specifically, it is shown that transmission line congestion can highly influence the performance of CBs. In particular, under certain transmission line congestion configurations, placing a CB at a bus can result in divergence (instead of convergence) between day-ahead and real-time markets prices.