A realistic assessment of day-ahead profit for wind farms in frequency–based energy pricing environment

Abstract

ABSTRACT The progressive regulatory moves in the competitive energy market have encouraged market participants to invest more in the green energy sector worldwide. The unpredictability of renewable energy sources has caused the long-term energy market to dominate, despite many demerits. Studies show that long-term contracts are economically inefficient due to forecasting errors. These cause higher imbalance costs and limit overall profit. Thus, utilities need to unlock the potential of short-term contracts to tackle this imbalance. Because of this, a day-ahead energy contract model for a wind farm in the short-term energy market is proposed in this paper. The model is devised by forecasting season-specific wind speed scenarios. The profit margin of the wind farm is estimated under the Indian energy market context. Practicality issues like frequency sensitive imbalance pricing, scheduled energy price, and regulations of Indian grid codes are implemented. Case studies and results demonstrate the effectiveness of the proposed model.