•Same
assumptions as before excepting that:
ØExampleGen
forecasts that the highest winning bid is either $32/MWh, $42/MWh or $52/MWh with 33% probability
each
•[Uniform price
auction] ExampleGen’s optimal bidding strategy is to bid $35/MWh
•[Pay-as-bid auction]
ExampleGen’s optimal bidding strategy
is to bid $52/MWh
ØRecognize
optionality of not producing when market price goes below incremental costs
ØBut, in effect, withholding output when the “market price” is $42/MWh
•
•