2004 E E E Intemational Conference on Electric Utility Deregulation, Restructuring and Power Technologies (DRPT2004)April 2004 Hong Kong

A Cluster Analysis of Power Producer’s Bidding

Using Average Electricity Price Difference-
Integration Model
Zhou Haol , Chen Jianhua’ , Han Zhenxiang’ ,Wang Dongming2 , Sun Weizhen2

Abstract: An average electricity price difference- be adjusted adequately to ensure safe operation. Bidding
integration model is proposed in this paper. This model can classification and analysis is a helpful tool for market
transform the unit’s biding curve of power producer in supervision authority, by which the supervision authority
market into an one-dimensional feature vector which can can conduct a scientific quantification analysis and
reflect the change of bidding curve quite conformably, so can
implement classification of unit’s biding using cluster manage power producers more efficiently. This paper
analysis. Through Clustering calculation of bidding curve mainly conducts a study on the classification analysis of
from Zhejiang electricity market, it is shown that bidding producer’s bidding.
curve can be classified accurately and efficiently using 20- Cluster analysis is often used in engineering analysis to
segment model and square sum of deviations. solve classification problems. Conventional cluster
analysis [10,11] can’t be used directly in bidding analysis.
Index Terms- Electricity market, Bidding curve, Average That is because bidding of multi-unit’s in market is a
electricity price difference-integration model, Sum of group of segment incremental curve. Conventional cluster
squares of deviations, Cluster analysis.
analysis only produces a classification towards clusters of
points in multi-dimensional space, but can’t classify
1 INTRODUCTION clusters of curves. This paper proposes an average

A S the most important participant of electricity market, electricity price difference-integration model to realize
power producer plays a significant role in the data conversion of the bidding curve and then to produce
operation of whole market. It is quite necessary to classification of unit’s bidding using cluster analysis. A
conduct calculation analysis and classification study on cluster analysis is conducted with bids data of Jul.-Sep.
producer’s bidding in order to ensure safe and stable 2002 from Zhejiang electricity market (China) in this
operation of the market. However, there are generally not paper. Analysis result shows that data conversion using
many power producers joining electricity network by average electricity price difference-integration model can
means of competitive bidding and oligopoly is easily solve the classification problems of bidding curve in
formed. So the study on power producer’s bidding electricity market and it is feasible to use this method to
study producer’s bidding classification.
strategies becomes more important. In [1-91, game theory,
genetic algorithm and Monte Carlo method and others Actually, combination of average electricity price
used to analyze and calculate power producer’s bidding difference-integration model with the method of cluster
strategies. These conventional methods are a kind of pre- analysis can produce a good classification of curves. This
analysis emphasizing on strategies instructions on principle also can be used in similar applications of other
individual power plant, not suitable for macroscopic fields.
classification and analysis of afterward bids from all the
plants. Study on bidding strategies is quite valuable, but it 2 AVERAGE ELECTRICITY PRICE DIFFERENCE-
is mainly for the service of power producers’. Viewed INTEGRATION MODEL
from supervision of whole market, bidding classification
Cluster analysis is one of the methods to study
analysis towards all the plants is much more important for
‘assigning cases to clusters’ in mathematical statistics
the stable operation of the whole market, under which
analysis. Its object is to group samples or variables into
some abnormal bids can be found. In addition, according clusters according to degree of association. There are
to classification results, the reserve capacity of market can usually two methods: one is to consider each sample as
one point of p-dimensional space and define certain
Zhou Hao is an associate professor in Dept. of E. E., Zhejiang
distance between points at p-dimensional coordinate; the
University. His research interests arc power market operation, economic other is to describe association degree among points using
studies and risk in electricity markct. (c-mail: zhouhao-cc@zju.edu.cn) similarity coefficient and then classify the samples or
Chen Jianhua is a graduated studcnt in Zhejiang University. His variables after determining coefficient or distance.
research interests include electricity economics, risk in clcctricity
market and bidding analysis. (e-mail: jianhuadq97@hotmail.~om) In Zhejiang electricity market, the bids data from each
Han Zhenxiang is a professor in Dept. of E.E., Zhejiang University,
national academician. His rescarch fields include voltagc stabilization,
power producer at certain trading interval is 2 X 10
the application in power system of AI and electricity market. dimensions (each unit bids by 10-segment and each

0-7803-8237-4/04/$17.0002004IEEE
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2004 IEEE Intemational Conference on Electric Utility Deregulation,Restructuring and Power Technologies (DFWT2004) April 2004 Hong Kong

segment includes two variables of bidding price and
capacity) and data of whole electricity market is R X 2 X
10 dimensions (R is number of units which participate
bidding). Obviously, conventional clustering method can't
be used directly in classification of curve. So we use the
following method to do the data conversion.
Step curve of piecewise linearization in Fig.1 can be
converted into discrete 1 X n dimension array. If
dimension n (number of segment) of the array is large, the
relationship between original bidding curve and annual
average clearing price of the array still can be reflected
relatively, expressed as S,:

2.1 Segmental quantization of bidding curve

si =[si,I,si,Z***sr,n-I,si,n] (5)
So vector S, can be used to represent unit's bidding
First we normalize bidding curve. Bidding capacity is
curve at trading interval i.
normalized with available capacity of unit as criterion and
2.2.2 Feature vector of 48 trading intervals (one day)
electricity price is normalized with upper limit of market
We divide one day at Zhejiang electricity market into
price as criterion. Only after being normalized, the
48 intervals with half-an-hour as one interval.
biddings of units with different capacities can be Use difference-integration to deal with each interval
compared. and get:
We quantify the bidding curve of each producer's as
Fig.1 shows. The capacity of curve is evenly partitioned sf=[s,,~,s,,~~~~s,,~~,,s~,~]
(i=l, 2 , *.., 48) (6)
into n ( n can be 10,20,50, etc) segments, shown as . The Convert the S of the above 48 intervals into a ( 1X
normalized value of electricity price of unit's bidding is 48n ) array, expressed as L, :
and normalized value of the annual average clearing price
in whole market is expressed as . So we get: L, = [SJ, - 4 - - , 1 , , ] (7)
F* =F/c, Obviously, L, has a good reflection of the deviation
(1)
P* = P I P ) , (2)
of bidding curve from annual average clearing price
(when n is big enough) and can be used effectively to
i represent the changes of bidding curve in one day.
ACX- i 2.2.3 Feature vector at certainperiod (one week,
Q:=--- - (i=0,1,2,3;.-n) (3) month, quarter, halfa year, one year)
- AC n
Average LD of each day at certain period and then get
Where p is annual (or previous year) average clearing
price in whole market (yuan/MWh), p is electricity price the average value . ED
of unit's bidding (yuadMWh) and e,
is upper limit of
-- - -
L , = [L,,L,, ...,L48] (8)
market price (yuan/MWh) , AC is available capacity of - m
unit and n is number of partitioned segments. Li = / m (i=1,2-.-, 48) (9)
k=l
' Unit's bidding
curve Where m is total number of days of the period and
l:k) is feature vector at interval i on the kthday.
-
LD can produce a good reflection of the deviation of
average bidding curve from annual average clearing price
at certain period and can be used to represent the price
Annual averay
cleanng price changes of bidding curve.

3 METHOD OF CLUSTER ANALYSIS

0 I/" 21" ... ... ... ... ... ... n -2ln n -I/n 1 Q'(unit's We use average electricity price difference-integration
-
~

Fig. 1 Segmental quantization of bidding curve

model to get vector S i, L , or L, which can
conformably feature bidding curve and finally get one
2.2 Feature vector afier average electricity price point at n-dimensional space. So we can use hierarchical
difference-integration clustering in classification. In this section, we discuss
2.2.1 Feature vector of unit's bidding curve at trading which clustering method is used in classification and how
interval i many segments are partitioned in segmental quantization.

g., = c,
Difference-integration is defined as:

(P*-F)dQ* (j=1,2,3;-.n)

Where i is trading interval and j is segment j after

(4)
3.1 Determining the method of cluster analysis
After data conversion with average electricity price
difference-integration model, we then use hierarchical
clustering to analyze power producer's bidding.
segmental quantization. Hierarchical cluster analysis is to merge the individual

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2004 IEEE Intemational Conference on Electric Utility Deregulation, Restructuring and Power Technologies (DRPT2004) April 2004 Hong Kong

into some subclasses until the total is in one collection.
Hierarchical clustering algorithm is the most widely used
in cluster analysis by which any variable or sample with
numerical attribute can be classified. The cluster analysis
procedures is as follows: 0Convert the data before
clustering to get feature vector of bidding curve; @Group
the samples into category and calculate distance between
samples. Group two samples with nearest distance into
one cluster; @Select and calculate the distance between
clusters and successively merge clusters until samples are
group into one cluster; @Draw hierarchical dendrogram.
Different classification results are expected with different
criterion or principle. Different clustering methods are
produced according to different calculation of distance
between clusters in @ and they are nearest-neighbor,
farthest-neighbor, average-linkage clustering, centroid
clustering and square sum of deviations.
3. I . I Principle of square sum of deviations
1) Data conversion
Before clustering, a conversion, generally
normalization, is performed to the data. As shown in
equalization (lo), the data is firstly centralized in column
and then normalized by standard deviations.
(10)
After hierarchical cluster analysis, a dendrogram is got,
which can visually reflect the association among research
objects.
We use the bids data from Zhejiang electricity
market on Aug. 14, 2002 to conduct the cluster analysis
with sum square of deviations, the result is shown in Fig.2.
Compare the result with the actual bidding data , it is
found that it is relatively comforms to the actual situation
if the bidding curves are clustered into 4 groups. Four
units in Zhenhai Power Plant with highest bidding are
clustered into a groups, Five units in Beilun Power Plant
units of plant with secondary highest bidding are
clustered into another group, Two units in Jiaxing Power
Plant and some units of other plants with lower bidding
are clustered into another group, and all units in other
plants with lowest bidding are clustered into another
group.
r 5 clusters

Fig.2 Clustering result using square sum of deviations

After conversion, the average of the data in each
3.1.2 Comparison between different clustering
column is 0 and variance is 1. After normalization using
methods
standard deviation, the stability is still maintained when We also use the bids data from Zhejiang electricity
sampling is changed. market on Aug. 14, 2002 to conduct the cluster analysis
2) Distance calculation with other methods, The results are as Fig.3-6.
Select suitable distance based on research object. This
paper chooses Euclidean distance (two-dimensional
Minkowsk metric).

dj;(2) = [
T('
jX
k=l
- x;k
)?]I2 (11)

Equation (1 1) is the conventional distance expression

used in cluster analysis.
3) Sum the squared deviations
Let D:, be the distance between G, and G,, and

G,. = ( G p , G q }be the merged cluster of G, and G,.

The distance recursion formula of G, and Gi is as follows:

Fig.3 Clustering result using nearest-neighbor

4) Determine genealogy classification
If classification is reasonable, the square sum of
deviations among samples of the same cluster shall be
relatively small and that between clusters relatively large.

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2004 IEEE Intemational Conference on Electric Utility Deregulation, Restructuring and Power Technologies (DWT2004) April 2004 Hong Kong

Xiaoshan. The result relatively conforms to actual bidding.

We also have 4 large clusters, each of which has even
number of units. Methods other than square sum of
deviations produce bad classification results on small
clusters and produce seriously uneven number of units on
large clusters. So we conclude that method of square sum
f of deviations is a suitable one.
3.2 Determining number of segments
Theoretically speaking, the more segments, the more
true reflection of original bidding curve. However, too
-54
5% many segments may lead to much higher calculation
Wr'
&
23
complexity. So number of segments becomes a issue
under research. We choose the data complete the same
P 10 m 33 dB w
with Fig. 6 and increase segments number of 20 to 50.
Fig.4 Clustering result using farthest-neighbor Then we conduct the cluster analysis (use square sum of
deviations to calculate distance between clusters) and the
result is as Fig. 7.

I
t
I----!
t t

r: fi fl3 23 ;?I 2: x:1 f? AKt 85

Fig.5 Clustering result using average-linkage

clustering a ,233 Jn a
t an n 153

Fig.7 Clustering result using sum of squares of

deviations (50 segments)

We compare Fig.6 with 7 and find that segment

increase only changes small classification details and
large cluster doesn't have substantial changes. However,
with segments increased from 20 to 50, calculating time
and complexity are increased a lot. So a curve of 20
segments can produce a true reflection of changes on
bidding curve. We suggest a 20-segment method in
cluster analysis.

4 CALCULATING RESULTS
We choose the bids data of Jul.-Sep. 2002 from
c : irt 14 x
i 2: 3.7 35 .LI;
Zhejiang electricity market to conduct the cluster analysis
Fig.6 Clustering result using centroid clustering using square sum of deviations with 20 segments. The
results are as Fig.8-11.
We compare the results of Fig.2-6 with the actual
bidding data and find that the result using square sum of
deviations is the most suitable one.
We further analyze the results using square sum of
deviations with the units information in Table 1 on
Appendix. We have small clusters of 5 units of Beilun, 4
units of Zhenhai, 2 units of Jiaxing and 2 units of

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2004 IEEE International Conference on Electric Utility Deregulation, Restructuring and Power Technologies (DRPT2004) April 2004 Hong Kong

:g ?a I*: .,a C8 ?I3

Fig.8 Cluster analysis result of July Fig. 11 Cluster analysis result from July to September
of 2002

As we can see from Fig. 8-1 1, classification results

of July, August and September respectively or the whole
quarter relatively conform to the actual situation. The
classification results are as follows:
l)In July, the actual bidding shows that the unit
bidding of power plant 1 is relatively high. Units of plant
1 with high bidding are clustered into one group and other
units of low bidding into the other group in clustering
calculation results.
2)In August, the actual bidding shows that the unit
bidding of plant 1 reduces and bidding of plant 8
increases remarkably. In clustering calculation results,
bidding is clustered into 3 groups: units of plant 1 with
highest bidding, units of plant 8 with secondary highest
bidding, and units of other plants with lower bidding.
3)In September, the actual bidding shows that the
unit bidding of plant 1 increases and that of plant 8
increases to the highest one based on the bidding of
August. In clustering calculation results, bidding is
clustered into 3 groups: units of plant 8 with highest
bidding, units of plant 1 with secondary highest bidding,
and units of other plants with lower bidding. The results
are also can be clustered into two groups: one is the units
of plant 1 and 8 with high biddings, the other is units of
other plants with low bidding. However, in July and
August, the biddings of plant 1 and 8 can’t be clustered
into one group, which also conforms to the actual
situation.
4) Seen from the whole quarter, the clustering results
are relatively the same with September because the
bidding of plant 8 increases in August and September. So
we cluster plant 1 and 8 into one and others units of low
bidding the other.
From above Figures we find that, the classification
results are consistent with actual situation well if we
partition all the units into large clusters of 4 or 5.

5 CONCLUSIONS
Cluster analysis of power producer’s bidding has
important significance for supervision authority to

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2004 IEEE International Conference o n Electric Utility Deregulation, Restructuring and Power Technologies (DRPT2004) April 2 0 0 4 H o n g K o n g

accurately and timely control abnormal biddings. It is also 18 TZC-- 330

UNIT8
an important measure to guarantee the safe and stable
19 WZC- 125 2 units in Wenzhou
operation of electricity market. UNIT 1 Power Plant
Average electricity price difference-integration model 20 wzc-- 125
transforms the unit’s biding curve of power producer in UNIT2
21 XSC-- I25 2 units in Xiaoshan
market into an one-dimensional feature vector which can UNITl Power Plant
reflect the change of bidding curve quite conformably, 22 XSC- 125
thus produces a correct and efficient classification of UNIT2
bidding curve. 23 ZHC-- 208 4 units in Zhenhai
UNIT3 Power Plant
A large number of segments is unnecessary in cluster 24 ZHC--
208
analysis, which will greatly increase calculation and time, UNIT4
but little impact on classification results. The bidding 25 ZHC--
208
UNIT5
curve is generally partitioned into 20 segments. 26 ZHC--
208
Among clustering methods, the result of using square UNIT6
sum of deviations is the best that can produce almost the
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