Exploring the Vickrey-Clarke-Groves Mechanism for Electricity Markets

Pier Giuseppe Sessa, Neil Walton, Maryam Kamgarpour

    Research output: Contribution to journalArticlepeer-review


    Control reserves are power generation or consumption entities that ensure balance of supply and demand of electricity in real-time. In many countries, they are procured through a market mechanism in which entities provide bids. The system operator determines the accepted bids based on an optimization algorithm. We develop the Vickrey-Clarke-Groves (VCG) mechanism for these electricity markets. We show that all advantages of the VCG mechanism including incentive compatibility of the equilibria and efficiency of the outcome can be guaranteed in these markets. Furthermore, we derive conditions to ensure collusion and shill bidding are not profitable. Our results are verified with numerical examples.

    Original languageEnglish
    Pages (from-to)189-194
    Number of pages6
    Issue number1
    Early online date18 Oct 2017
    Publication statusPublished - 2017


    • control reserves
    • Electrical networks
    • game theory
    • optimization


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