Exploring retail energy markets through competitive simulation

Future sustainable energy systems will need efficient, clean, low-cost, renewable energy sources, as well as market structures that motivate sustainable behaviors on the part of households and businesses. “Smart grid” components can help consumers manage their consumption only if pricing policies are in place that motivate consumers to install and use these new tools in ways that maximize utilization of renewable energy sources while minimizing dependence on non-renewable energy. Serious market breakdowns, such as the California energy crisis in 2000, have made policy makers wary of setting up new retail energy markets. We present the design of an open, competitive simulation approach that will produce robust research results on the structure and operation of retail power markets as well as on automating market interaction by means of competitively tested and benchmarked agents. These results will yield policy guidance that can significantly reduce the risk of instituting competitive energy markets at the retail level, thereby applying economic motivation to the problem of adjusting our energy production and consumption patterns to the requirements of a sustainable future.