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Sustainability 2017, 9(8), 1318; doi:10.3390/su9081318

Impact of Wind Electricity Forecasts on Bidding Strategies

1
Bionline, Paterna 46980, Spain
2
Department of Financial Economics, Universitat de València, València 46010, Spain
*
Author to whom correspondence should be addressed.
Received: 16 June 2017 / Revised: 18 July 2017 / Accepted: 25 July 2017 / Published: 1 August 2017
(This article belongs to the Special Issue Wind Energy, Load and Price Forecasting towards Sustainability)
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Abstract

The change in the generation mix from conventional electricity sources to renewables has important implications for bidding behaviour and may have an impact on prices. The main goal of this work is to discover the role played by expected wind production, together with other relevant factors, in explaining the day-ahead market price through a data panel model. The Spanish market, given the huge increase in wind generation observed in the last decade, has been chosen for this study as a paradigmatic example. The results obtained suggest that wind power forecasts are a new key determinant for supply market participants when bidding in the day-ahead market. We also provide a conservative quantification of the effect of such trading strategies on marginal prices at an hourly level for a specific year in the sample. The consequence has been an increase in marginal price to levels higher than what could be expected in a context with notable wind penetration. Therefore, the findings of this work are of interest to practitioners and regulators and support the existence of a wind risk premium embedded in electricity prices to compensate for the uncertainty of wind production. View Full-Text
Keywords: day-ahead electricity market; renewables; strategic bidding day-ahead electricity market; renewables; strategic bidding
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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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Ballester, C.; Furió, D. Impact of Wind Electricity Forecasts on Bidding Strategies. Sustainability 2017, 9, 1318.

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