Analysis of Market Power of Flexible Demand Resources Providers in Pool-type Electricity Market

Market power is defined to describe the capabilities of market participants in controlling price through strategic behaviors for extra profits. Strong market power will weaken the free competition of electricity transactions and poses threat to efficient market operation. Previous researches in market power mainly focus on the supply side. However, in the demand side, the increasing penetration of flexible demand resources (FDR) is reshaping the way in which market is operated, which also brings new concern to the traditional market power issue. The FDR providers also have the ability to control the load price and quantity strategically, especially when the load fluctuates widely and thermal units respond slowly. Combining the general indices in supply side with the characteristics in demand side, this paper investigates market power of FDR providers in pool-type market and proposes two novel indices, including the Must Use Quantity (MUQ) and Must Cut Quantity (MCQ). The proposed two indices are quantified as the load that must be provided or cut by FDR providers to balance a given generation power. To calculate the proposed indices, the Optimal Power Flow (OPF) model are adopted. The modified IEEE 9-bus system is simulated to demonstrate the feasibility of the proposed indices.