In deregulated power markets, power firms bid into the day-ahead power market either with buy offers or sell offers. The auction mechanism and competition determine the equilibrium price and quantity for each hour. If the bid price of a company is below the market clearing price, then the offer...

A Compressed Air Energy Storage System is a means of storing energy which can then be used when the demand for energy increases. In this system, air is compressed in a cavern when power prices are low, and this air is used to run a natural gas-fired turbine to generate power when prices go up,...