Swarm intelligence-based strategic bidding in competitive electricity markets

In the competitive electricity markets, formation of supply bid is one of the main concerns, where suppliers have to maximise their profit under incomplete information of other competing generators. An environment is described in which suppliers bid strategically to sell electricity in a pool market. The bidding decision is optimised from a single supplier´s viewpoint in both block-bid and linear-bid models of an electricity market. To include uncertain behaviour of other competing suppliers, two different probabilistic models are used. Their bids are constructed using probability distribution functions obtained from the decision-maker´s observations of historical market data. Single supplier´s decision-making problem is solved by a modern population-based heuristic algorithm, known as particle swarm optimisation (PSO). Search procedure of PSO is based on the concept of combined effect of cognitive and social learning of the members in a group. The effectiveness of the proposed method is tested with examples and the results are compared with the solutions obtained using the genetic algorithm approach.