Abstract
With the deregulation of electricity market, generation companies must take part in strategic bidding by offering its bidding quantity and bidding price in a day-ahead electricity wholesale market to sell their electricity. This paper studies the strategic bidding of a generation company with thermal power units and wind farms. This company is assumed to be a price-maker, which indicates that its installed capacity is high enough to affect the market-clearing price in the electricity wholesale market. The relationship between the bidding quantity of the generation company and market-clearing price is then studied. The uncertainty of wind power is considered and modeled through a set of discrete scenarios. A scenario-based two-stage stochastic bidding model is then provided. In the first stage, the decision-maker determines the bidding quantity in each time period. In the second stage, the decision-maker optimizes the unit commitment in each wind power scenario based on the bidding quantity in the first stage. The proposed two-stage stochastic optimization model is an NP-hard problem with high dimensions. To tackle the problem of “curses-of-dimensionality” caused by the coupling scenarios and improve the computation efficiency, a modified Benders decomposition algorithm is used to solve the model. The computational results show the following: (1) When wind power uncertainty is considered, generation companies prefer higher bidding quantities since the loss of wind power curtailment is much higher than the cost of additional power purchases in the current policy environment. (2) The wind power volatility has a strong negative effect on generation companies. The higher the power volatility is, the lower the profits, the bidding quantities, and the wind power curtailment of generation companies are. (3) The thermal power units play an important role in dealing with the wind power uncertainty in the strategic bidding problem, by shaving peak and filling valley probabilistic scheduling.
Highlights
Since generation companies do not know the exact value of wind power in each time period, one of the most important problems in strategic bidding is the trade-off between the additional power purchase cost and the wind curtailment cost
We are interested in theFigure following question: Should generation companies select an aggressive decision with a high bidding quantity or a conservative decision with a low bidding quantity? We selected two scenarios from the set of these 50 scenarios, and the differences in scheduling decisions of power generation companies between these two scenarios were1observed
This paper examines the bidding of power generation companies with wind and thermal power units in a free deregulated electricity market
Summary
In a liberalized electricity market, the electricity market in each time period is formed through an auction mechanism, which is called day-ahead power exchange. Using this mechanism, an independent system operator matches the sellers’ and buyers’ bids to determine the market clearing price corresponding to the equilibrium point of electricity market. An independent system operator matches the sellers’ and buyers’ bids to determine the market clearing price corresponding to the equilibrium point of electricity market Under this context, it is of great significance for generation companies to optimize its bidding decisions in order to earn more profit
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
