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Energies 2012, 5(11), 4804-4823; doi:10.3390/en5114804
Article

Optimal Bidding Strategies for Wind Power Producers in the Day-ahead Electricity Market

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Received: 19 September 2012; in revised form: 13 November 2012 / Accepted: 13 November 2012 / Published: 20 November 2012
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Abstract: Wind Power Producers (WPPs) seek to maximize profit and minimize the imbalance costs when bidding into the day-ahead market, but uncertainties in the hourly available wind and forecasting errors make the bidding risky. This paper assumes that hourly wind power output given by the forecast follows a normal distribution, and proposes three different bidding strategies, i.e., the expected profit-maximization strategy (EPS), the chance-constrained programming-based strategy (CPS) and the multi-objective bidding strategy (ECPS). Analytical solutions under the three strategies are obtained. Comparisons among the three strategies are conducted on a hypothetical wind farm which follows the Spanish market rules. Results show that bid under the EPS is highly dependent on market clearing price, imbalance prices, and also the mean value and standard deviation of wind forecast, and that bid under the CPS is largely driven by risk parameters and the mean value and standard deviation of the wind forecast. The ECPS combining both EPS and CPS tends to choose a compromise bid. Furthermore, the ECPS can effectively control the tradeoff between expected profit and target profit for WPPs operating in volatile electricity markets.
Keywords: wind power; bidding; day-ahead electricity market; risk; chance-constrained programming; multi-objective optimization wind power; bidding; day-ahead electricity market; risk; chance-constrained programming; multi-objective optimization
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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MDPI and ACS Style

Zhang, H.; Gao, F.; Wu, J.; Liu, K.; Liu, X. Optimal Bidding Strategies for Wind Power Producers in the Day-ahead Electricity Market. Energies 2012, 5, 4804-4823.

AMA Style

Zhang H, Gao F, Wu J, Liu K, Liu X. Optimal Bidding Strategies for Wind Power Producers in the Day-ahead Electricity Market. Energies. 2012; 5(11):4804-4823.

Chicago/Turabian Style

Zhang, Haifeng; Gao, Feng; Wu, Jiang; Liu, Kun; Liu, Xiaolin. 2012. "Optimal Bidding Strategies for Wind Power Producers in the Day-ahead Electricity Market." Energies 5, no. 11: 4804-4823.


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