Using and comparing metaheuristic algorithms for optimizing bidding strategy viewpoint of profit maximization of generators

Authors

1 Department of Socioeconomic Systems Engineering, Economic College, University of Economic Sciences, the First Blind Alley, Jahan Alley, End of Taleghani Street, 1563666411, Tehran, Iran

2 Department of Industrial Engineering, Industrial Engineering College, Islamic Azad University, South Tehran Branch, Entezari Alley, Oskoui Alley, Choobi Bridge, 1151863411, Tehran, Iran

Abstract

With the formation of the competitive electricity markets in the world, optimization of bidding strategies has become one of the main discussions in studies related to market designing. Market design is challenged by multiple objectives that need to be satisfied. The solution of those multi-objective problems is searched often over the combined strategy space, and thus requires the simultaneous optimization of multiple parameters. The problem is formulated analytically using the Nash equilibrium concept for games composed of large numbers of players having discrete and large strategy spaces. The solution methodology is based on a characterization of Nash equilibrium in terms of minima of a function and relies on a metaheuristic optimization approach to find these minima. This paper presents some metaheuristic algorithms to simulate how generators bid in the spot electricity market viewpoint of their profit maximization according to the other generators’ strategies, such as genetic algorithm (GA), simulated annealing (SA) and hybrid simulated annealing genetic algorithm (HSAGA) and compares their results. As both GA and SA are generic search methods, HSAGA is also a generic search method. The model based on the actual data is implemented in a peak hour of Tehran’s wholesale spot market in 2012. The results of the simulations show that GA outperforms SA and HSAGA on computing time, number of function evaluation and computing stability, as well as the results of calculated Nash equilibriums by GA are less various and different from each other than the other algorithms.

Keywords