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Energies 2016, 9(11), 945; doi:10.3390/en9110945

Long Term Expected Revenue of Wind Farms Considering the Bidding Admission Uncertainty

1
Department of Electrical and Computer Engineering, Isfahan University of Technology, Isfahan 84156-83111, Iran
2
Energy Technology Department, Aalborg University of Denmark, 9100 Aalborg, Denmark
*
Authors to whom correspondence should be addressed.
Academic Editor: Vincenzo Dovì
Received: 4 September 2016 / Revised: 25 October 2016 / Accepted: 6 November 2016 / Published: 19 November 2016
(This article belongs to the Special Issue Energy Policy and Climate Change 2016)
View Full-Text   |   Download PDF [1440 KB, uploaded 19 November 2016]   |  

Abstract

As a long term bidding behavior, bid shading is exhibited by wind farms participating in real Uniform Price (UP) markets. This signifies that the wind farm owners bid far below their true long run marginal cost. In this paper, a method is proposed to consider the uncertainty of bidding admission in the long term expected revenue of wind farms. We show that this consideration could perfectly explain the observed bid shading behavior of wind farm owners. We use a novel market price model with a stochastic model of a wind farm to derive indices describing the uncertainty of bidding admission. The optimal behavior of the wind farm is then obtained by establishing a multi objective optimization problem and subsequently solved using genetic algorithm. The method is applied to the analysis of long term bidding behavior of a wind farm participating in a Pay-as-Bid (PAB) auction such as Iran Electricity Market (IEM). The results demonstrate that wind farm owners change their bid shading behavior in a PAB Auction. However, the expected revenue of the wind farm will also decrease in a PAB auction. As a result, it is not recommended to make an obligation for the wind farms to participate in a PAB auction as a normal market player. View Full-Text
Keywords: wind farm expected revenue; market price uncertainty; bidding Admission uncertainty; genetic algorithm; PAB and UP auctions; long term bidding behavior wind farm expected revenue; market price uncertainty; bidding Admission uncertainty; genetic algorithm; PAB and UP auctions; long term bidding behavior
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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. (CC BY 4.0).

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MDPI and ACS Style

Haji Bashi, M.; Yousefi, G.; Bak, C.L.; Radhakrishna Pillai, J. Long Term Expected Revenue of Wind Farms Considering the Bidding Admission Uncertainty. Energies 2016, 9, 945.

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