Part VII: BIDDING PROTOCOLS AND PRICING RULES
In the US, agents submit multi-part bids including all the economic and technical parameters. By doing so, they ensure that the dispatch is technically feasible while allocating the bids where they maximize the social welfare for the scenario defined by the expected demand, units availability, RES-E production, etc.
In Europe agents can submit simple (price-quantity) bids, complex bids and block bids (among others). Complex and block bids represent neither an actual single technical constraint nor cost component, but rather a combined effect of several. For example, the block orders used in a number of European markets allows agents to bids a “block” of energy covering an interval of consecutive hours and the minimum average price to which they are willing to commit for the interval. Where all-or-nothing terms are in place, if the average price offered for the interval is not reached, the simple hourly bids are removed from the eligible set of bids (or “killed”) in the market clearing process. These type of bids allows avoiding the risk of non-economical dispatches, but probably do not ensure a scheduling as efficient as one provided when considering multi-part bids (among other reasons complex and block bids usually entail agents to some extent anticipating the unit’s dispatch).