Mascem: A Multiagent System That Simulates Competitive Electricity Markets

competitive; a market environment is replacing the traditional centralized-operation approach. This transformation is often called the deregulation of the electricity market. Many electricity companies have split into several companies that specialize in energy generation, transmission, or distribution. These companies need to adopt new management approaches to survive in this market. The industry needs new software tools—such as price-based unit commitment and price-bidding tools—to support new market activities. Also, it needs new modeling approaches that simulate how electric power markets might evolve over time and how market participants might react to the changing economic, financial, and regulatory environment in which they operate. To study electricity market behavior and evolution, we developed MASCEM,1 a multiagent simulator system where agents represent market entities such as generators, consumers, and market operators, and new participants such as traders. Agents can establish their own objectives and decision rules. Moreover, they can adapt their strategies as the simulation progresses on the basis of previous efforts’ success or failure. The simulator probes the effects of market rules and conditions by simulating the participants’ strategic behavior. As a decision support tool, our simulator includes several types of negotiation mechanisms found in electricity markets to let the user test them and learn the best way to negotiate in each one. The simulator is flexible; the user completely defines the model he or she wants to simulate, including the number of agents, each agent’s type and strategies, and the market type. (See the “Related Work” sidebar for other approaches to simulation.) Electric companies as well as regulator entities can use MASCEM to analyze the impact of their potential decisions.