A power game: simulating the long-term development of an electricity market in a competitive game

An electricity market simulation game was developed to help students, market analysts and policy makers understand the short and long-term dynamics of electricity markets. In the game, small groups of participants play the roles of competing electricity generation companies. They need to bid their electricity into a power exchange and decide about investing in generation plant. They operate in an uncertain environment, not only because they do not know their competitors´ strategies, but also because fuel prices, wind and the availability of power plant vary. In the game, a full business cycle is simulated, so participants experience the effects of their investment decisions. A first extension of the game is a CO₂ market, which effectively changes the rules of the game midway. This way, players learn to analyze the impacts of policy instruments and policy uncertainty upon investors. Early experience indicates that the simulation game creates a high level of involvement by participants, that results in much deeper insight than more traditional didactic methods. The improved understanding that the game provides can also be used to convey insights in related topics, such as variations of the policy measures that were modeled in the game.