Energy Working Group: Supply Function Equilibrium and its Policy Implications for Wholesale Electricity Markets

PESD visiting scholar Pär Holmberg from the Research Institute of Industrial Economics (IFN), Stockholm led this Energy Working Group talk.

Holmberg discussed (1) the multi-unit auction used in wholesale electricity markets where producers sell their electricity to retailers and large consumers, (2) a theoretical model of producers' strategic bidding behavior and (3) how bids are influenced by contracts and the market design.

The presentation was based on his paper "The Supply Function Equilibrium and its Policy Implications for Wholesale Electricity Markets", which was co-authored with David Newbery (University of Cambridge, UK).

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Pär Holmberg is an Associate Professor in Economics and has a PhD in Electric Power Engineering. He is working at the Research Institute of Industrial Economics (IFN), Stockholm, and is an associate of the Electricity Policy Research Group, University of Cambridge. Pär's research focuses on wholesale electricity markets, especially strategic bidding behavior in electricity auctions.