A g e n t s a n d M a r k e t s Isabel Praça, Carlos Ramos, and Zita Vale, Polytechnic Institute of Porto A round the world, the electricity industry, which has long been dominated by vertically integrated utilities, is experiencing major changes in the structure of its markets and regulations. Owing to new regulations, it's evolving into a distributed industry in which market forces drive electricity's price. The industry is becoming 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. An electricity market's main objectives are to ensure the system's secure and efficient operation and to decrease the cost of electricity through competition. Several market structure models exist that could help achieve this goal. 2 The market environment typically consists of a pool, as well as a floor for bilateral contracts. A pool, or power exchange, is a marketplace where electricity-generating companies submit production bids and their corresponding market prices, and consumer companies submit consumption bids (see the "Pool Mechanisms" sidebar). A market operator regulates the pool. The market operator uses a market-clearing tool to set the market price every hour; this results in a market-clearing price and a set of accepted production and consumption bids. In pools, an appropriate market-clearing tool is an auction mechanism-the most common being a standard uniform auction. Bilateral contracts are negotiable agreements between sellers and buyers (or traders) about power supply and receipt. The bilateral-contract model is
Mascem REF is a multi-agent system (MAS) to simulate competitive electricity markets.
Mascem: A Multiagent System That Simulates Competitive Electricity Markets
IEEE Intell. Syst.
IEEE Intell. Syst.
Computer Science