Monte Carlo simulation and its application in modelling electricity market behaviour

AbstractThere has been substantial restructuring of the Australian Electricity Supply Industry over the past ten years. At the center of this restructuring has been the introduction of the National Electricity Market (NEM). In the NEM all electricity is traded through a common pool. Market outcomes therefore have a direct impact on the profi tability of participants. There is clearly a need to be able to simulate the electricity market operation. This paper discusses how Monte Carlo techniques integrated with linear program dispatch algorithms are being used to model the NEM. The paper discusses various applications for these tools. The paper also discusses important aspects of the simulations that need to be considered.