Study on Conjectural Variation Based Bidding Strategy in Spinning Reserve Markets

In this paper, a novel model of opportunity cost of spinning reserve capacity is proposed based on sequential dispatching. A model of strategic behaviors of generation firms based on conjectural variation is proposed to apply in monopoly spinning reserve capacity markets with incomplete information. According to the conjectural variation model, each firm rationally maximizes its profits while considering reactions of their competitors. The advantage of this method over others is that it is a real reflection of actual power markets without the need to know all firms´ actual costs. Examples are used to illustrate that the proposed model is logical and practical.