Title :
Optimal contract design for energy procurement
Author :
Tavafoghi, Hamidreza ; Teneketzis, Demosthenis
Author_Institution :
Dept. of Electr. Eng. & Comput. Sci., Univ. of Michigan, Ann Arbor, MI, USA
fDate :
Sept. 30 2014-Oct. 3 2014
Abstract :
We consider a mechanism design problem for strategic agents with multi-dimensional private information and uncertainty in their utility/cost functions. We show that the optimal mechanism is a menu of contracts that can be implemented as a nonlinear pricing scheme. We illustrate the result by considering an optimal energy procurement mechanism from a strategic seller with conventional (deterministic) and renewable (random) plants. We address the problem of risk-sharing and ex-post voluntary participation (commitment) under uncertainty.
Keywords :
contracts; power markets; procurement; electricity markets; mechanism design problem; multidimensional private information; optimal contract design; optimal energy procurement mechanism; optimal mechanism; strategic agents; utility-cost functions; Contracts; Cost function; Electricity supply industry; Pricing; Procurement; Production; Uncertainty; contract under uncertainty; mechanism design; multidimensional private information; renewable energy;
Conference_Titel :
Communication, Control, and Computing (Allerton), 2014 52nd Annual Allerton Conference on
Conference_Location :
Monticello, IL
DOI :
10.1109/ALLERTON.2014.7028436
