Bidding Strategy of Wind Power with Uncertain Supply in the Spot Electricity Market

Abstract

In order to enhance operational efficiency and break up the monopoly, Chinese electricity market has undergone reforms since 2002. This paper considers a spot electricity market in a discrete-time setting that includes two types of power generation firms, renewable firms (wind generators) and conventional firms (thermal power plants). A stochastic bi-level model for an upper-level wind power producer aiming profit maximization and lower-level maximizing the social welfare has been proposed in this work. This strategic wind producer participates as a price-maker in the day-ahead market, and a deviator in the balancing market to compensate for production deviations due to wind power uncertainty. Accordingly, the potential analysis considering wind power output scenarios, price mechanisms, coordinated bidding strategy, and policy implications are investigated. This paper could guide a better integration of renewable energy into the electricity market.