Market Mechanisms for Buying Random Wind

The intermittent nature of wind power leads to the question of how wind power producers can participate in a deregulated electricity market. In the proposed auction paradigm, wind farms bid probability distributions of generation, instead of bidding cost functions as thermal units do. Our focus is to design incentive compatible mechanisms that elicit truthful information of strategic agents who supply stochastic resource. We first study the aggregators problem of how to select the wind farms, which have the most desirable distributions. We then study the independent system operators (ISOs) problem of how to price wind energy for stochastic economic dispatch.