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Value-Creation Potential from Multi-Market Trading for a Hydropower Producer

Author

Listed:
  • Marte Fodstad

    (SINTEF Energy Research, 7034 Trondheim, Norway)

  • Mats Mathisen Aarlott

    (SINTEF Technology and Society, 7034 Trondheim, Norway)

  • Kjetil Trovik Midthun

    (SINTEF Technology and Society, 7034 Trondheim, Norway)

Abstract

We study a hydropower producer’s potential for value-creation from multi-market trading given the price variations in the markets and the flexibility provided through access to hydro reservoirs. We use a perfect foresight optimization model for a price-taking hydropower producer co-optimizing his trades in the day-ahead, intra-day and balancing markets. The model is used on real market data from Norway, Sweden and Germany. The study shows a theoretical potential for added value when selling energy in multiple markets relative to optimal day-ahead sale. Most of this value is achievable also when the perfect foresight is limited to the period from day-ahead bidding until operation. Flexible production plants achieve the largest relative added values for multi-market sales, and has the largest benefit from a long horizon with perfect foresight.

Suggested Citation

  • Marte Fodstad & Mats Mathisen Aarlott & Kjetil Trovik Midthun, 2017. "Value-Creation Potential from Multi-Market Trading for a Hydropower Producer," Energies, MDPI, vol. 11(1), pages 1-15, December.
    • Handle: RePEc:gam:jeners:v:11:y:2017:i:1:p:16-:d:123931
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    References listed on IDEAS

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    1. Boomsma, Trine Krogh & Juul, Nina & Fleten, Stein-Erik, 2014. "Bidding in sequential electricity markets: The Nordic case," European Journal of Operational Research, Elsevier, vol. 238(3), pages 797-809.
    2. Eduardo Faria & Stein-Erik Fleten, 2011. "Day-ahead market bidding for a Nordic hydropower producer: taking the Elbas market into account," Computational Management Science, Springer, vol. 8(1), pages 75-101, April.
    3. Mauricio B. C. Salles & Junling Huang & Michael J. Aziz & William W. Hogan, 2017. "Potential Arbitrage Revenue of Energy Storage Systems in PJM," Energies, MDPI, vol. 10(8), pages 1-19, July.
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    Cited by:

    1. Bilgili, Mehmet & Bilirgen, Harun & Ozbek, Arif & Ekinci, Firat & Demirdelen, Tugce, 2018. "The role of hydropower installations for sustainable energy development in Turkey and the world," Renewable Energy, Elsevier, vol. 126(C), pages 755-764.

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