International Conference on Electrical, Electronics, and Optimization Techniques (ICEEOT) - 2016
Bidding strategy of IPP in Competitive Electricity
market using FACLPSO
Ranjan Kumar Mallick Ramachandra Agrawal
Dept of EEE Dept of EE
SOA University SOA University
Bhubaneswar, India Bhubaneswar, India
rkm.iter@gmail.com ramachandra1agrawal@gmail.com
Abstract:
There were monopoly markets all over the world in
power generation and also in the power distribution
sectors. After 1990s many countries had changed
their economics of electricity market, where the
participants are the Independent power
producers(IPPs),who submit the amount of energy
they can provide to the market at any particular
trading hour and the price they will charge for the
same, and the large and small consumers, submit
the energy they require and the amount they want
to pay for it. However in this case we have
considered the IPP side bidding only using Fuzzy
adaptive Comprehensive learning particle swarm
optimisation(FACLPSO) method, which is tested on
IEEE-30 bus system with 6 IPPs and the output in
our case is found to be much better on comparison
to that obtained by each of the FAGSA,CLPSO and
PSO methods.
Keywords: Bidding, CLPSO, IPPs, FACLPSO,
FAGSA
I. Introduction
A poolco market is a central auction that combines all
the regional sellers and buyers. All the sellers and
buyers have to submit their respective bids to an
independent system operator (ISO).Then ISO has to
match the highest price buying offers to the lowest
price selling bids and it has to also decide the MCP
(market clearing price). In the competitive market it
makes the generating companies bid at higher price
than marginal rate which is set as their production cost.
So deciding the appropriate price so as to win the
auction in the market they needed to have the other
competitors bidding information, but it is sealed
auction mechanism, however based on the past
information they have to predict their price as a result
of which they can maximise their individual profit.
This needs them to adopt a specific strategy called
bidding strategy. In the liberalized electricity market
the Independent power producer want to maximize
their profit and the Independent system operator want
to enhance the common welfare.
Maximising profit problem is solved by using PSO.
The first method is a conventional PSO to search for a
feasible solution using ǻq and b,while the second is a
decomposition based PSO [1].
The cost of energy depends on the amount of fuel
consumed by the generating unit and is roughly
represented by a function C(q) from [2].
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Prakash Kumar Hota
Dept of EE
VSSUT, Burla
Burla, India
p_hota@rediffmail.com
While modelling the bidding strategy game theory has
been used extensively, which usually based on
oligopoly models [3].Poolco is one of the main
structures in deregulated competitive market where
regional buyers and sellers are brought together for a
central auction[4].Genetic algorithm determines
bidding strategies in which the marketplace model is
identical to commodities exchange [5].A power
supplier may bid a higher price than the marginal
production cost to increase its own profit in case the
market is not competitive perfectly and the procedure
adopted by it is called strategic bidding [6].After IPPs
submit their individual bids, the system operator
determines the equilibrium point where the market is
cleared [7].The second method is by utilizing the
estimation of bidding behaviour of rival participants
[8,11].Forecasted information is another basis for an
IPP to have a good bidding strategy as explained in
[9].Liberalization of electricity markets started in
Europe in 1990’s and is still continuing in U.K.,first
introduced reforms of electricity market. “Nordel” was
formed to supply electricity to Norway, Sweden,
Finland, and Denmark.Germany,France, Switzerland
are served by European Energy Exchange. Primary
Control, Secondary Control and minute reserve are
recognized by the association of European transmission
operators as reported in[10].
In 1982 Chile, 1992 Argentina, 1993 Peru, Bolivia and
Colombia in 1994, Brazil 1996, Central American
countries in 1997 introduced market oriented reforms.
In Argentina bids were changed in each six months. In
Brazil the market was set up for upcoming 24 hours.
Colombian market however followed British approach
[12].In 1998 California restructured whole sale
electricity market was opened. This operates a day
ahead market for energy. PJM market began
functioning from 1997. In Texas wholesale electricity
markets and trading takes place by bi lateral
agreements[13].
Using Monte Carlo simulation an optimization model
is used estimate the rival bidding behaviour
in[14].China started reforms in 1990. Japan also started
reforms from 1990.CERC takes care of interstate
activities. It currently operating on a day ahead
electricity market with closed auctions where bidding
is accepted from both seller and consumer sides and
clears at a MCP at a certain trading hour[15].With the
network constraints Ma et al have proposed a linear
supply function model based on PSO in[16].
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 International Conference on Electrical, Electronics, and Optimization Techniques (ICEEOT) - 2016
In Chile and UK in middle of 1980s reform started and
spread to many countries. An understanding of market
structure and market price behaviour can be achieved
via country wise analysis of the market rules[17].Nash
equilibrium based power market bidding model is by
Lai et al in[18].
Price sensitive of demand affects strategic bidding is
well explained in[19].A multi objective optimization
problem using FFA is proposed by Soleymani in [20]
is indeed an innovative approach for IPP bidding.
With emission as a constraint a new search strategy
with PSO is reported in [21] with a linear bidding
curve model. Price responsive demand bidding on
congestion and LMP in pool based electricity market is
analysed by Singh et.al. in[22].Dead weight loss
implying loss of social benefit is caused while profit
maximisation by an IPP is shown in [23].
II.System Modelling and Design
Particle swarm optimisation (PSO)
Particle swarm optimisation is a computational method
that can be applied to non-linear optimisation
problems. In PSO the swarm contains individual
particles which are nothing but randomly initialised
solutions, which are move around through the search
space by considering the best fitness of the whole
swarm (global best or gbest) and the best fitness of the
particle so far (personal best or pbest). This is actually
done by calculating the velocity of particle .
Where, “‫ݐݏܾ݁݌‬௞ ” and “ܾ݃݁‫ݐݏ‬௞ ” as earlier explained
are the personal and global best values, these are the
particles for which the best fitness was obtained. “ ”
is the weight parameter and ܸ௞ is the previous velocity
of the system which constitutes the first term which
moves the particle in same direction. The second and
third terms are responsible for convergence of the
particle to its global best and personal best values
which correspond to exploitation of the search space
and depth of the search procedure. Here “‫ ݓ‬௞ ” is a
linearly decreasing function and is given by:
w max − w min
w k = w max − *k
k max
a1 & a2 are constants where rand1 & rand2 are random
assigned numbers taken from a distribution of 0 to 1.
X k +1 = X k + Vk +1
Also the velocity and X are constrained to a maximum
and minimum value and they are modified if they
Any search algorithm is based upon two principles
which are exploration and exploitation. In previous
cases a linearly decreasing weight parameter has been
used in velocity determination. Linearly decreasing
function ensures exploration in the initial iterations and
exploitation in the later stages. But what if the swarm
is stuck in a local optima then the weight parameter
will sink the whole swarm in the local optima. To solve
this we use a fuzzy adaptive system where the weight
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violate these constraints in each iteration so as to
ensure the swarm remains within the search space.
If the X value is more than maximum value then X
value is equal to maximum value, and similarly if the X
value is less than minimum value then X value is equal
to minimum value.
The process is continued for ݇௠௔௫ times and global
best value obtained in the end is considered as the
optimum value or the best solution.
Comprehensive Learning Particle Swarm Optimisation
[CLPSO]
As mentioned above in PSO each particle learns from
both its personal best and global best value at the same
moment. The global value helps in the faster
convergence of the particles around the gbest value but
what if the gbest value is far away from the global
optima then the particles converge at the wrong
position. To avoid this CLPSO is used, in this velocity
is determined just by the personal best value of the
particles.
(
Vk +1 = w k v k + a 1rand1 * p kbest − X k )
Also out of all the pbest value which particle’s pbest
value is to be considered including its own is
determined by probability Pci known as learning
probability which is given by
§ § 10(i − 1) · ·
0.045 * ¨¨ exp¨¨ ¸¸ − 1¸¸
© © ps ¹ ¹
Pci = 0.05 +
(exp(10) − 1)
Where, ‘ps’ is the particle size of the swarm. For each
particle in a dimension a random number is generated.
If the learning probability is less than the random
number generated for the corresponding particle, the
particle will learn from its own pbest. Otherwise it will
learn from another particles pbest value. Tournament
selection process is used for choosing the pbest value
of the particles-
1.First any two particles are randomly chosen from the
roster of particles excluding ..
2.the particles whose velocities are already updated.
3.The fitness value of the pbest values of these
particles are compared with each other and the better
one is chosen. To ensure that time is not wasted from
poor values the particles ceases to improve their values
for certain generations called the refreshing gap ‘m’
is not linearly decreasing but is determined by a fuzzy
inference system. This fuzzy system takes the
normalised function value and the present weight value
as input and accordingly gives the output that is ¨w.
“Adaptive” means that the system adapts to current
situations and accordingly tries to improve the output.
Fuzzy rules
Here Mamdani-Sugeno fuzzy system is used to
formulate the conditional statements which comprise
the logic. The fuzzy rules are designed to determine the
change in the weight parameter.
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Table 1- Set of fuzzy rules
Rule No
NFV
1 S
2 S
3 S
4 M
5 M
6 M
7 L
8 L
9 L
Figure 3-membership function for input variable NFV
Figure 4: Membership function of input 1
Figure 5: Membership function of input 2
System Modelling
The whole system model is based upon the below
mentioned set of equations. Our objective is to find an
appropriate bid price and quantity so as to win the bid
for that hour. So, in summation we have to obtain a
price-quantity offer curve for a particular generator in a
Competitive market.
1 K T
[ ( )]
P (ǻ q , b ) = ¦ ¦ Ptk q kt − C q kt
k k =1 t =1
for k=1…..K; t=1……T
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Antecedent Consequent
W ¨W
S ZE
M NE
L NE
S PE
M ZE
L NE
S PE
M ZE
L NE
Subject to following constraints
N
¦ ǻq
i =1
i ≤ Q max
0 ≤ b i ≤ Bmax for i=1.....N
0 ≤ ǻq i ≤ Q max for i=1.....N
( )
I Ptk
q kt = ¦ ǻq
i =1
i
where, I(ܲ௧௞ )=max j such that ܾ௝ ൑ ܲ௝
for k= 0,1.....K,t= 0,1.......T,i= 0,1.... I(ܲ௧௞ )
( )
C q kt = eq kt + f (q kt ) 2
NOMENCLATURE
‫ܥ‬ሺ‫ݍ‬௧௞ ሻ is the cost of generating q MWh ($/MWh)
݁ǡ ݂are linear, quadratic cost coefficients of the
generator’s cost function
ܲ௧௞ is the market clearing price at hour t of scenario
k($/MWh)
ܳ ௠௔௫ is the maximum generating capacity of the
generator (MWh)
‫ܤ‬௠௔௫ is maximum allowable bid price in the market
($/MWh)
ܾ௜ is the bid price of block i ($/MWh)
‫ݍ‬௜ is bid energy amount increase of block i (MWh)
‫ݍ‬௜௧ is total energy generated at hour t
In this paper we have used fuzzy adaptive
comprehensive learning PSO to search for a feasible
solution using ο‫ݍ‬and b.
k aj
Q0 + ¦
bj
j=1
Ptk = R = k
1
K+¦
j=1 b j
ܽ௝ǡ ܾ௝ are bidding coefficients
K, Q0 are non-negative coefficients
Bidding strategy based on FACLPSO: Artificial
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intelligence technique Fuzzy logic is to used for
improving the performance of CLPSO method where
as the soft computing technique is implemented using
comprehensive learning particle swarm optimization
technique to get the maximum possible profit for all
the market participants. The weighting parameter is
governing the particle velocity is adaptively updated
using Fuzzy rule based FIS system designed and hence
the name is FACLPSO

.
GENERATOR e f Pmin(MW) Pmax(MW)

1 2.0 0.00375 20 160

2 1.75 0.0175 15 150

3 1.0 0.0625 10 120

4 3.25 0.00834 10 100

5 3.0 0.025 10 130

6 3.0 0.025 10 130

Table 2-Generator constraints of IEEE-30 Bus system

III.Evaluation and Analysis:

Figure 6-convergence characteristics of FACLPSO in comparison with other algorithm

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 International Conference on Electrical, Electronics, and Optimization Techniques (ICEEOT) - 2016

1800
1600
1400
1200
FACLPSO
1000
FAGSA
800
600 CLPSO

400 PSO

200
0
1 2 3 4 5 6
No. of market participants

Figure 7-bar graph comparing FACLPSO with other algorithms

GENERATOR PSO CLPSO FAGSA FACLPSO
bj bj bj bj
1 0.001092 0.0868 0.021437 0.0672
2 0.050953 0.4410 0.121878 0.3500
3 0.181976 0.7740 0.337380 0.4756
4 0.024283 0.1321 0.023806 0.0754
5 0.072791 0.1500 0.100457 0.1135
6 0.072791 0.1500 0.063465 0.1823

Table 3-bidding prices of FACLPSO compared to other algorithms

Table 4-Individual generator profits of FACLPSO with market clearing price

GENERATOR PSO CLPSO FAGSA FACLPSO

P(MW) Profit($) P(MW) Profit($) P(MW) Profit($) P(MW) Profit($)

1 160.00 772.41 160.00 833.16 160.00 1034.9 160.00 1624.2

2 100.83 340.10 100.83 376.65 60.04 376.38 75.8891 734.1

3 32.35 125.06 32.35 136.08 58.91 157.22 24.7109 252.2

4 100.00 280.36 100.00 318.32 100 498.47 100.00 868.8

5 53.40 136.32 53.40 157.72 60.41 275.38 85.9113 653.2

6 53.40 136.32 53.40 157.72 60.41 275.38 53.4887 450.1

MCP 6.88 8.34 9.06 12.7515

Total profit 1790.57 1979.65 2617.73 4582.6

We see that the FACLPSO takes minimum

From Figure 9 it is apparent that the FACLPSO gives
more profits than any other algorithm used. From
Figure 10 it is visible that the FACLPSO has faster
convergence to the solution.
So, the proposed algorithm gives better and faster
results by using fuzzy rules to dictate the weight
parameter.
IV. Conclusion
computational time due to Fuzzy adaptive weight
parameter and also it outperforms the other algorithms
with a huge margin. Therefore, in conclusion the
proposed FACLPSO outperforms when compared with
PSO, CLPSO, and FAGSA methods. So, it is suitable
for application in optimisations like bidding. An
empirical formula has been used in this paper to
calculate the market clearing price MCP. In future a
probability distribution function [PDF] can be used to

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predict the clearing prices from all the collected data of
previous bids. Bidding strategies using PDF are found
for auction at any certain time of trading only. Inter
temporal constraints as minimum up and down times
and their respective maximum numbers are not taken
into account in this work, which can also be included
in the future work. More over only IPPs are considered
but the consumer side bidding is also a matter of
consideration and will be accounted in the future work.
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