2009 International Conference on Artificial Intelligence and Computational Intelligence
Study on Bidding Schemes and Decision-making method for Power Plant in Day-
ahead Power Market
Zhongxiong Yuan
Computer and Information Engineering Institute
Shanghai University of Electric Power
Shanghai, China
yzx19600601@163.com
Abstract—This paper presents a novel method to help the
bidder to make a reasonable bidding strategy. Three bidding
schemes are discussed in this paper, that is, cost analytical
method, time series analysis method and grey prediction
method. The decision method based on multi-attribute
decision-making principle is presented to choose a best
bidding strategy from optional three schemes. This method is
used in a certain power plant of East-China electricity
market and case study verified its effectiveness.
Key words ： electricity market; market clearing
price(MCP); multi-attribute decision-making principle
I. INTRODUCTION
With the development of the power supply market, an
effective assistant decision-making system is necessary for
each power plant, which helps the bidding engineer to deal
with any useful information and make the bidding decision
to obtain maximum profit with minimum risk. Making
bidding schemes and choosing bidding strategy are two
important tasks for it. Up to now, there are two ways to
make bidding schemes. One is based on generation cost,
while the other is based on MCP forecasting results. The
generation cost includes the fixed cost and the variable one
and is usually calculated according to the same method,
whereas the MCP forecasting is the key aspects.
It is a hard task to forecast the power price because its
sequence has the characteristics of strong fluctuation,
complex change and little discipline. Up to now, methods
used in MCP forecasting include time series method[1,2,3],
neural network method[4,5,6] and grey theory[7] and so on.
Each method has its advantage and disadvantage. Neural
network method is able to deal with the MCP series
forecasting, especially it has strong uncertainly
fluctuation. However, the accurate results are decided by
enough training samples to cover most operating
conditions, which are lacked in the primary power market
of our country. Time series method is only dependent on
the history data and gets satisfied results on the condition
that the price sequence can be smoothed. Grey theory
method can consider multi factors and is easy to realize,
whereas it is much better fit the price series with
exponential discipline.
978-0-7695-3816-7/09 $26.00 © 2009 IEEE
DOI 10.1109/AICI.2009.473
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Danzhen Gu
Electric and Control Engineering Institute
Shanghai University of Electric Power
Shanghai, China
gudanzhen@shiep.edu.cn
Therefore, it is important for the assistant decision-
making system to choose a scientific decision among
several bidding schemes, which are formed by different
methods. There are several methods to make the decision,
such as Markowitz average value – square error method[8].
This method is sample but it is often not satisfied the
hypothetical term to affect the evaluating results. The
method based on multi-attribute decision principle[10] is
another wide application method, which combines several
factors with the bidder’s taste.
The of this paper proceeds as follows: Section 2 briefly
introduces the three bidding schemes making methods, that
is, the bidding scheme based on cost, the bidding scheme
based on time series MCP forecasting, and the one based
on grey theory MCP forecasting. Section 3 describes the
bidding schemes choice on the basis of the multi-attribute
decision principle. Section 4 is a real example which is
used in a certain power plant of East-China power market,
original data and calculating results are shown in this part,
which verified the method proposed in the paper is feasible.
Finally, conclusions are outlined in Section 5.
II. INTRODUCTION OF THREE BIDDING SCHEMES
MAKING METHODS
A. Bidding Scheme based on cost calculation
The cost of a power plant consists of fixed part and
alterable part and the latter accounts for the majority. The
alterable cost can be obtained by calculating the coal
consumption.
The coal consumption of generation boiler is
minimized when turbine works under fixed state. The
bidding strategy that under the condition of satisfying
entire power transmission network tidal current constraint
and electric power need restricts, the capability of the
generator is adequately used. The bidding model is
described as follows.
Object function (under the fixed state, the cost of the
generating is minimum)
M
24
min ∑ Cti Pti (t = 1, 2," , T ) (1)
i =1 T
545
 T is the day bidding interval number, M is the Where, Ctotal ,t is the generation cost of No. i
generating set number under the t interval a day in a plant.
generating set in t interval. R pt is the net profit of the
Cti is the unit generating fuel cost for No. i set working
in t interval, Pti is the generating quantity for No No. i
plant in t interval. Rri is the business tax rate of the plant
in t interval.
set working in t interval.
Constraint conditions are described as follows. B. Bidding scheme based on grey method
The grey theory for MCP forecasting method is
k
introduced in this part at first. Then, the generating
∑P = P
i =1
ti
t
quantity decision is discussed.
1) Grey theory for MCP forecasting
Pt ≤ Pi max a) generating the grey sequence
Pt ≤ Pnett As we known, the grey system generation has three
kinds: AGO, IAGO and mapping method. AGO is used in
qt ≤ Qt max this paper.
ΔPi min ≤ ΔPti ≤ ΔPi max Original series:X ( 0 ) = [ X ( 0 ) (k ) | k = 1,2,..., n]
(1)
Gi min ≤ Pti ≤ Gi max Generation series: X = [ X (1) (k ) | k = 1,2,..., n]
(2) If the sum of two series satisfies the following relation:

Where, Pt is the bidding power quantity of the plant in k

X (1) (k ) = ∑ X ( 0 ) (i ) (4)
t interval, Pnett is the power quantity demand of the power i =1

transmission network in t interval, Pin max is the maximum

(1) (0)
of pours power for the plant as a node of the power Where { X } is AGO series for { X } .
transmission network in t interval, qt is the bidding price b) Building GM (1 , 1) difference equation
Qt max is the ceiling price of the
of the plant in t interval, Assuming the AGO series satisfy the following
difference equation:
power transmission network in t interval, ΔPti is the
increment of the power quantity for No. i generating set dx (1)
in t interval(may be defeated), ΔPi max and ΔPi min are the + ax (1) = u (5)
dt
maximum increment and minimum increment of the
power quantity for No. i generating set in t interval The difference equation may rewrite in vector pattern:
respectively, Gi max and Gi min are the maximum
increment and minimum increment of power for No. i YN = B T A (6)
generating set in t interval respectively.
Solution for this model is divided into two steps: Where,
Step 1: Calculating the output power of generating set
Pti at the time, which makes the generating set works in ⎡ 1 (1) (1) ⎤
fixed state as far as possible, and ascertaining the bidding ⎡ x ( 0 ) ( 2) ⎤ ⎢− 2 [ x (1) + x ( 2)] ⎥
⎢ (0) ⎥ , ⎡a ⎤ ⎢ 1 ⎥
power quantity Pt . So, the output power of each ⎢ x (3) ⎥ A = ⎢ ⎥ , ⎢ 1 (1) (1)
1 ⎥
YN =
⎢M ⎥ ⎣u ⎦ B = ⎢− 2 [ x (2) + x (3)] ⎥
generating set is decided by carrying out generating set ⎢ ⎥ ⎢M M⎥
load economy distribution according to equality tiny ⎢⎣ x ( 0 ) (n)⎥⎦ ⎢ 1 ⎥
increase algorithm. ⎢ 1 (1) (1) ⎥
Step 2: Ascertaining power plant bidding prices in two ⎢− [ x ( n − 1) + x ( n)] ⎥
⎣ 2 ⎦
steps. Fixed cost and direct cost Ctotal is decided at first.
YN and B are known quantities can be obtained by the
Then, (3) is used to ascertain the bidding price and shown
below. original series and generation series. So, A is a parameter
to be determined by using Least Square Method according
to (7).
max[Ctotal ,i (i = 1, 2," , M )] (3)
Pt =
1 − R pt − Rri

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 ~
⎛a⎞ Because of X k (l ) having linear character, (10) can be
A = ( B B) B YN = ⎜⎜ ⎟⎟
T −1 T
(7)
⎝u ⎠ rewritten as below:
~ ~
xk (l ) = ∇ d ∇ sD P k ( l ) k 〉 d + D, l ≥ 0
After a and u are obtained, the discrete form of
~
original difference equation is （set x (1) (1) = x ( 0) (1) ） The forecasting form for Pk ( l ) is:
described as (8).
⎧~ ~
u u ⎪ P (l ) = Ψ − 1 ( B ) X (l )
x (k + 1) = [ x (1) − ]e − ak +
(1) (0)
(8) ⎨ k k
(11)
a a k = 1,2,3... ⎪ Ψ ( B ) = ∇ d ∇ D = (1 − B ) d (1 − B s ) D
⎩ s

c) Regressive restoration 2) Deciding the generating quantity

The above series are restored and the grey model of The desired generating quantity is decided according to
original series is obtained: the method shown in the above part and not discussed in
X (0) (k + 1) = X (1) (k + 1) − X (1) (k ) detail here.
u III. MULTI- ATTRIBUTE DECISION PRINCIPLE BASED
= (1 − e a )[ X (0) (1) − ]e − ak ,(k = 0,1,...)
a DECISION-MAKING
(9)
2) Deciding the generating quantity A. Criterion (attribute) design
After the forecasting MCP is obtained as above, the The relevant data can be collected and the Decision-
relative generating quantity is decided as follows: making matrix can be built in Table 1.
Firstly, calculating the possible maximum profit Pti , gen
under this MCP, this is the larger one of the two following TABLE I. DECISION-MAKING MATRIX
data. One is the maximum generating income, which a1 a2 … an
equals the maximum sale income minus the generating
S1 a11 a12 … a1n
cost. Because there is the price difference between day-
S2 a21 a22 … a2n
ahead bidding market and base contract market, there
# # # #
exists the exchange of the transfer of the sale power right.
The other profit equals to the price difference multiply the Sn am1 am2 … amn
possible quantity difference between these two markets.
After that, the relative generating quantity decided by the The quantification for qualitative value of attribute is
possible maximum profit is chosen as the expectation shown as Table 2.
generating quantity. TABLE II. QUANTIFICATION FOR QUALITATIVE VALUE
C. Bidding scheme based on time series analysis Very low Lower Low middle
1) MCP forecasting based on time series analysis Beneficial
The MCP is generated every 15 minutes in the power 1 2 3 4
result type
market. Therefore, the same time interval random time Cost type 7 6 5 4
series is composed of the electricity prices series. The Higher High Very high
random time series can be accurately described by the Beneficial
Time Series Analysis. 5 6 7
result type
Assuming the electricity prices satisfies the formula Cost type 3 2 1
ϕ ( B )Φ ( B s )∇ ∇ s P = θ ( B ) Θ( B s )ε D>0 and set
d D
t t

X = ∇ d ∇ sD Pt . Then X t is the ARMA( p′, q′) Series,

B. Data Preprocessing:
ϕ ′( B ) X t = θ ′( B )ε , θ ′( B ) = θ ( B )Θ( B s ) . p′, q′ is the order
The data inconsistency can be removed by the linear
number. transformation and the data can be compared uniformly:
The forecasting of l step of X t is :
Effective type data is expressed as xij = aij / a max
j and
~ l −1 ~ p q cost type data is expressed as
X k ( l ) = ∑ ϕ j x k ( l − j ) + ∑ ϕ j x k − j + ∑ θ j ε k − j +1 (10)
j =1 j =1 j =1

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 xij = 1 − aij / a max (12) ⎡ n ⎤
1/ 2
j
∑
⎢ ⎥
d i° = ⎢ ( xij − x °j ) 2 ⎥
⎢ ⎥ (14)
⎢ ⎥
max
Where, a j = max{aij} ⎣⎢ j =1 ⎦⎥
.
i
C. Scheme choice x *j = max{xij} x °j = min{xij}
Where, , .
The technique for order preference by similarity to
i i
ideal solution (TOPSIS) is used to choose the optimal Then, to each scheme i , Ci is calculated respectively
scheme. Regard the attribute value as a point of n- and the results are sorted by Ci .
dimensional space, the Ideal point is composed of the
optimal value of each attribution in the matrix and
Negative ideal point is composed of the worst value of d i°
each attribution in the matrix. Hope point is chosen near Ci =
(15)
the ideal point as close as possible, and away from the d i° + d i*
negative ideal point as far as possible.
According to Euler distance, the distance from the ideal
point and negative ideal point and the formula is: IV. CASE STUDIES
Study case comes from a certain power plant of East-
⎡ n ⎤
1/ 2 China power market, which has two 300MW turbine
generators. The East-China power market trial-operation
∑
⎢ ⎥
d i* =⎢ ( xij − x *j ) 2 ⎥ spanned from the period of 2006-12-20 to 2006-12-26. The
⎢ ⎥ (13)
⎢ ⎥ original data, its bidding schemes and decision-making
⎢⎣ j =1 ⎥⎦
schedule of one generator are shown in this section.

TABLE III. FIELD VALUES AND FORECASTING RESULTS FOR DAY-AHEAD MCP

2006-12-26 X Power Plant Power Price Forecasting

Cost Time Series Analysis Grey Theory

Bilat Gene
Po The
Base eral ratio Bid Genera
wer cost Price Price Generat
Time contr contr n ding Post ting Post
to of cost Profit forecas forec ing
interval act act Sche Pow profits profits profits
decl electr t ast profits
power powe dulin er
are icity
r g

00:15 151 14 165 6 171 303 12111 2096 210 1125.7 279.1 200 1125.7 279.1
00:30 148 17 165 12 177 302 12495 2083 205 1120.6 273.9 193 1120.6 273.9
00:45 148 17 165 18 183 301 12876 2122 203 1120.6 273.9 192 1120.6 273.9
01:00 147 18 165 24 189 299 13209 2182 203 1118.8 272.2 193 1118.8 272.2
01:15 147 18 165 30 195 298 13583 2220 201 1118.8 272.2 191 1118.8 272.2
01:30 148 17 165 36 201 297 13954 2276 200 1120.6 273.9 188 1120.6 273.9
01:45 148 17 165 42 207 296 14322 2315 196 1120.6 273.9 183 1120.6 273.9
02:00 148 17 165 48 213 295 14688 2353 196 1120.6 273.9 184 1120.6 273.9
… … … … … … … … … … … … … … …

TABLE IV. DECISION MATRIX

power generation bidding success

power generation cost power generation profit
income rate
A（cost forecast） 2207089.84 1829970.08 3928.33 3(low)
B（Time Series Analysis） 131848.09 24245.61 1120.86 5(Higher)
C（Gray forecast） 131848.09 24245.61 1120.86 6(High)

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 Table 3 gives the results of three bidding methods, that is, [4] Hong Ying-yi, Hsiao Chuan-yo, “Loeational marginal price
cost method, time series analysis and grey theory. forecasting in deregulated electricity markets using artificial
intelligence”, IEE Proc., Gener., Transm. and Distrib, 149(5), pp.
The schemes are ordered by multi-attribute decision： 621-62, 2002.
Step1: The criterion (attribute) design. [5] Xia Ji-guang, Zhang Wei-cun, Yin Yi-xin, “The power market
Step2: In order to acquire the better scheme, cost, profit clearing price forecasting based on RBF network,” Mie of China,
and risk are considered in this study. The decision matrix is 34(5), pp. 38-14, 2005.
obtained in Table 4. [6] Yamin H Y, Shahidehpour S M, Li Z, “Adaptive short-term
Step3: Data pre-treatment. Decision matrix is electricity price forecasting using artificial neural networks in the
transformed by the linearity alternation. The transformed restructured power markets,” Electrical Power and Energy Systems,
26(8), pp. 571-58, 2004.
matrix is shown as follows.
[7] Du Song-huai, Hou Zhi-jian, Jiang Chuan-wen, “Grey forecasting
price mutation and its simulation,” Journal of Grey system, Vol.1, pp.
TABLE V. TRANSFORMED DECISION MATRIX 43-48, 2003．
power power bidding [8] Hao S, “A study of basic bidding strategy in clearing pricing
generation generation success auctions,” IEEE Transactions on Power Systems, 15(3), pp. 975－
income cost rate 980, 2002.
A (cost forecast) 1 0 0.5 [9] Deng Ju-long, Grey Control System, Wuchang: Huazhong Institute
of Technology Press, 2004．
B (Time Series Analysis) 0.06 0.987 0.83
[10] Hu yun_quan, Basis and application of operational research, Beijin:
C (Gray forecast) 0.06 0.987 1 Higher education Press, 2008.

Step4: Scheme selection (TOPSIS )

Ideal point of each attribute is (1, 0.987, 1), Negative
ideal point of each attribute is (0.06, 0, 0.5) respectively.
* °
The d i , d i and Ci value of each scheme are shown is
Table 6.

TABLE VI. d i* , d i° AND Ci OF EACH SCHEME

scheme i A B C

d i* 1.106 0.955 0.940

d i° 0.940 1.041 1.106
Ci 0.459 0.522 0.541

Decision can be gotten from Table 6, that is, Scheme C

is the best choice, Scheme B is next and Scheme A is the last
one.
V. CONCLUSIONS
Building bidding scheme is a complicated process and a
lot of factors should be considered. It is helpful for power
plants to solve this complicated task by using assistant
decision-making system. The various electricity price
forecasting methods are adopted and an appropriate
decision-making method is proposed in the system. Case
studies verified its validity.
REFERENCES
[1] Nogales F J, Contreras J, Conejo A J, et a1, “Forecasting next-day
electricity prices by time series models,” IEEE Trans on Power
Systems, 2002, 17(2).
[2] Cuaresma J C, Hlouskova J, Kossmeier S, et a1, “Foreeasting
electricity spot-prices using linear univariate timeserie model,”
Applied Energy, 77(1), pp. 87-106, 2004.
[3] Contreras J, Espinola R, Francisco J, et a1, “ARIMA models to
predict next-day electricity prices,” IEEE Trans on Power Systems,
18(3), pp. 1014—1020, 2003．

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