Previous work has demonstrated that the price
elasticity of the demand side reduces electricity producers’
ability to exercise market power. However, price elasticity
cannot capture alone consumers’ flexibility, as the latter mainly
involves shifting of loads’ operation in time. This paper provides
for the first time qualitative and quantitative analysis of the
value of demand shifting in mitigating market power by the
generation side. An equilibrium programming model of the
oligopolistic market setting is developed, taking into account the
inter-temporal characteristics of demand shifting. The decision
making process of each strategic producer is modelled through a
bi-level optimization problem, which is solved after
transforming it to a Mathematical Program with Equilibrium
Constraints (MPEC). The market equilibria resulting from the
interaction of multiple independent producers are determined
by employing an iterative diagonalization method. Case studies
on a test market with day-ahead horizon and hourly resolution
quantitatively demonstrate the benefits of demand shifting in
limiting generation market power, by employing relevant
indexes from the literature.