Methodology for Electricity Price Forecasting in the Long Run

Abstract

The long-term forecasting of electricity price has received less attention in literature. A probable reason for less attention is uncertainty about various factors in the long run, for instance- oil price, regulatory policies, political intervention, technological changes, energy mix, grid operations, etc. As a general operation, energy generated through different sources is supplied to grid which is finally composed of “energy mix”. A large decision on the finalisation of retail electricity price could also depend on the load factors and capacity utilization of energy generating plants.A majority of the studies dealing with electricity price forecast electricity prices in the short run. Whereas, the aim of this study is to present a long-term perspective by introducing a methodology framework that consists of various parameters associated with the forecasting of electricity price in the long run. To the best of our understanding, this framework has not been proposed in existing energy literature, and therefore, under an assumption that future electricity market will be dominated by clean energy generation, this study brings novelty to the literature.