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This paper proposes a game-theoretic model to analyze the strategic behavior of inc-dec gaming in market-based congestion management (redispatch). We extend existing models by considering incomplete information about competitors' costs and a finite set of providers. We find that these extensions do not dissolve inc-dec gaming, which already occurs in our setup of two regions. We also benchmark market-based redispatch against grid investment, cost-based redispatch, and the Vickrey-Clarke-Groves mechanism. The comparison highlights a significant inefficiency of market-based redispatch and inflated redispatch payments. Finally, we study seven variations of our basic model to assess whether different market fundamentals or market design changes mitigate inc-dec gaming. None of these variations eliminate inc-dec gaming entirely.

This paper proposes a game-theoretic model to analyze the strategic behavior of incdec gaming in market-based congestion management (redispatch). We extend existing models by considering incomplete information about competitors’ costs and a finite set of providers. We find that these extensions do not dissolve inc-dec gaming, which already occurs in our setup of two regions. We also benchmark market-based redispatch against grid investment, cost-based redispatch, and the Vickrey-Clarke-Groves mechanism. The comparison highlights a significant inefficiency of market-based redispatch and inflated redispatch payments. Finally, we study seven variations of our basic model to assess whether different market fundamentals or market design changes mitigate inc-dec gaming. None of these variations eliminate inc-dec gaming entirely

The European-wide goal of increasing the share of final electricity consumption from renewable sources to 27% by 2030 increases the supply volatility of the power system considerably. To manage this volatility, ancillary services for the power system become increasingly important. The most important short-term ancillary service is balancing power: it balances the electricity demand and supply instantaneously and, thus, ensures a constant frequency over time in alternating current grids. In most liberalized electricity markets worldwide, the procurement of balancing power is organized with the help of auctions. This thesis analyzes balancing power auctions theoretically and empirically and focuses on the current Austrian-German and the future European-wide Secondary Balancing Power (aFRR) auction design.