High price volatility and excessive price reduction are introduced as two emerging problems in wind dominant electricity markets. In this study, an agent-based simulation methodology is employed to investigate the impact of two pricing mechanisms, uniform and pay-as-bid, on the mentioned problems. According to the proposed agent-based approach, electricity market agents (here generation units) learn from their previous bidding experience to obtain maximum financial. A comparative study is then conducted to investigate the impact of mentioned pricing schemes on price volatility and average price level. It is shown that these two pricing mechanisms cause different bidding behaviours for the generation units. This study suggests that this change in market agent behaviour, modifies the overall price volatility and system average price. The results indicate that a pay-as-bid pricing mechanism can alleviate policy maker's concerns regarding mentioned emerging problems in power systems with extremely high percentage of wind power penetration. It is also shown that market efficiency is lower under pay-as-bid scheme. The validity of the proposed methodology is investigated using IEEE 24-bus test system with 33 generation units.
Farashbashi-Astaneh, S-M., Hu, W., & Chen, Z. (2015). Comparative Study between Two Market Clearing Schemes in Wind Dominant Electricity Markets. IET Generation, Transmission & Distribution, 9(15), 2215 - 2223. https://doi.org/10.1049/iet-gtd.2014.1077