A Bidding Strategy to Address Risks of Virtual Power Plants in the Day-Ahead Electricity Market

Abstract

Virtual power plants (VPPs) can aggregate distributed resources across various nodes to participate and collaborate in electricity market trading. Unlike traditional standalone generators or load aggregators, this study leverages the dual role of VPPs as producers and consumers. It introduces a natural risk–hedging mechanism and proposes a price-acceptance bidding strategy for VPPs in the day-ahead spot market, which primarily relies on electricity price forecasts. This strategy is compared with scenarios where distributed resources or traditional generators/load aggregators bid independently. The analysis focuses on the success rate of market participation and the actual financial returns. The findings indicate that the proposed strategy based on the natural risk–hedging mechanism substantially enhances the resilience of VPPs in managing market risks and effectively mitigates the negative impacts of price volatility and forecasting errors on their economic benefits.