Optimal strategic offerings for a conventional producer in jointly cleared energy and balancing markets under high penetration of wind power production

Evangelos G. Tsimopoulos and Michael C. Georgiadis

Applied Energy, 2019, vol. 244, issue C, 16-35

Abstract: This work, based on Stackelberg hypothesis, considers a conventional power producer exercising their dominant position in an electricity pool with high penetration of wind power production. A bi-level optimization model is used to provide optimal offer strategies for the aforementioned producer in a jointly cleared energy and reserve pool settled through an hourly auction process. The upper-level problem illustrates the expected profit optimization of the strategic producer while the lower-level problem represents the energy-only market clearing process through a two-stage stochastic program. The first stage clears the day ahead market, and the second stage presents the system operation in balancing time though a set of plausible wind power production realizations. The bi-level problem is recast into a mathematical program with equilibrium constraints which is then reformulated into a mixed integer linear program. These transformations occur using the Karush-Kuhn-Tucker optimality conditions and the strong duality theory. The suggested model provides optimal strategic offers and local marginal prices under different levels of wind penetration and network line transmission capacities.

Keywords: Strategic producer; Energy-only markets; Energy dispatch; Reserve deployment; Strategic offers; Wind production uncertainty (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:244:y:2019:i:c:p:16-35

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DOI: 10.1016/j.apenergy.2019.03.161

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