Multi-part bids in electricity markets with uncertainty: A simulation-based approach to identify equilibria

We present an agent-based iterative simulation model to investigate the efficiency of simple compared to complex bidding schemes in the presence of uncertainty of demand. The two-step simulation model includes a unit commitment and generator decision problem. We find that simple bidding can lead to ex-post over-, and undersupply of the generation units compared to complex bidding. Our results further suggest that with increasing demand uncertainty the efficiency advantage of complex over simple bids becomes smaller but is always positive.