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A bidding strategy for minimizing the imbalances costs for renewable generators in Spanish power markets

Author

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  • Francisco Javier Eransus

    (Instituto Complutense de Análisis Económico (ICAE) – Facultad de Ciencias Económicas y Empresariales, Universidad Complutense de Madrid)

Abstract

The aim of this paper is to suggest a simple methodology to be used by renewable power generators to bid in Spanish markets in order to minimize the cost of their imbalances. As it is known, the optimal bid depends on the probability distribution function of the energy to produce, of the probability distribution function of the future system imbalance and of its expected cost. We assume simple methods for estimating any of these parameters and, using actual data of 2014, we test the potential economic benefit for a wind generator from using our optimal bid instead of just the expected power generation. We find evidence that Spanish wind generators savings would be from 7% to 26%.

Suggested Citation

  • Francisco Javier Eransus, 2016. "A bidding strategy for minimizing the imbalances costs for renewable generators in Spanish power markets," Documentos de Trabajo del ICAE 2016-13, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    • Handle: RePEc:ucm:doicae:1613
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    File URL: https://eprints.ucm.es/id/eprint/39134/1/1613.pdf
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    References listed on IDEAS

    as
    1. Holttinen, H., 2005. "Optimal electricity market for wind power," Energy Policy, Elsevier, vol. 33(16), pages 2052-2063, November.
    2. Chaves-Ávila, José Pablo & Hakvoort, Rudi A. & Ramos, Andrés, 2013. "Short-term strategies for Dutch wind power producers to reduce imbalance costs," Energy Policy, Elsevier, vol. 52(C), pages 573-582.
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    More about this item

    Keywords

    Power markets; Renewable energy; Uncertainty; Optimal bidding; Forecasting.;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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