An NLP model for evaluating the impact of Italian liberalized electric energy market rules on independent power producers

This paper presents a procedure for simulating the hourly bidding process of an Independent Power Producer (IPP), who aims at maximizing his own profit in the competitive context resulting from the electric energy market liberalisation. In the new context, market rules define how the IPP interacts with other competing power producers and with the Market Operator in the process of producing and transmitting electricity as well as of determining the ”market clearing price”. Aim of the work is to study how market rules affect these interactions, in order to detect conditions under which the interaction results happen to be in contrast with the liberalisation aim, i.e. the improvement of economic efficiency. Therefore the model developed in this paper is thought of as a tool for analysing how market rules affect the IPP profits and for detecting whether the IPP may exert market power. In the numerical experiments three cases are discussed, with reference to IPPs of different dimensions.