Exploring retail energy markets through competitive simulation

Future sustainable energy systems will need efficient, clean,low-cost, renewable energy sources, as well as market structuresthat motivate sustainable behaviors on the part of householdsand businesses. “Smart grid” components can help consumersmanage their consumption only if pricing policies arein place that motivate consumers to install and use these newtools in ways that maximize utilization of renewable energysources while minimizing dependence on non-renewable energy.Serious market breakdowns, such as the California energycrisis in 2000, have made policy makers wary of settingup new retail energy markets. We present the design of anopen, competitive simulation approach that will produce robustresearch results on the structure and operation of retailpower markets as well as on automating market interactionby means of competitively tested and benchmarked agents.These results will yield policy guidance that can significantlyreduce the risk of instituting competitive energy markets atthe retail level, thereby applying economic motivation to theproblem of adjusting our energy production and consumptionpatterns to the requirements of a sustainable future.