Simulating a Competitive Electricity Market

The introduction of competition in the electricity sector around the globe is aimed at improving efficiency in production, transmission and distribution of electrical energy. Privatization and deregulation in this sector are also intended to attract players and investments in the markets as well as to ensure competitive electricity price. This paper presents the use of an agent-based simulation platform to study the effectiveness of introducing an electricity market in Indonesia. Power companies that offer supply to the market have been represented as intelligent agents. The bidding behavior of these agents have been developed using Q-learning algorithm. Thus, agents can put up strategic bids that maximize their profits. The simulation platform can be used to decide on feasible trading arrangement yielding low electricity price and high availability level. In this paper, the impact on different pricing rules on the spot price is explored.