Agent-based competitive simulation: Exploring futureretail energy markets

Future sustainable energy systems will need efficient, clean,low-cost, renewable energy sources, as well as market structuresthat motivate sustainable behaviors on the part ofhouseholds and businesses. “Smart grid” components canhelp consumers manage their consumption only if pricingpolicies are in place that motivate consumers to install anduse these new tools in ways that maximize utilization ofrenewable energy sources while minimizing dependence onnon-renewable energy. Serious market breakdowns, such asthe California energy crisis in 2000, have made policy makerswary of setting up new retail energy markets. We present thedesign of an open, competitive simulation approach that willproduce robust research results on the structure and operationof retail power markets as well as on automating marketinteraction by means of competitively tested and benchmarkedelectronic agents. These results will yield policyguidance that can significantly reduce the risk of institutingcompetitive energy markets at the retail level, thereby applyingeconomic motivation to the problem of adjusting ourenergy production and consumption patterns to the requirementsof a sustainable future.