Coordinated bidding in sequential electricity markets: Effects of price-making

Kim K. Miskiw, Emil Kraft and Stein-Erik Fleten

Energy Economics, 2025, vol. 144, issue C

Abstract: As the uncertainty and time granularity of short-term electricity markets increase and as intraday trading gains importance, deriving good trading decisions becomes increasingly complex. This paper analyses the potential benefit of coordinating bids in three sequential electricity markets using a three-stage stochastic optimisation. The modelled markets include a typical European market setting consisting of a balancing reserve, a day-ahead, and an intraday market. Due to limited intraday market liquidity, the trading strategies also take price impacts into account. The results indicate that coordinated bidding can increase profitability, with the extent of gains depending on the price impacts. In a case study with a biomass and photovoltaic portfolio operating in Germany, we find that coordinated bidding increases the average revenue by around 18% over all analysed type days. As renewable generation continues to increase, trading strategies that coordinate bids across markets are expected to become increasingly important.

Keywords: Balancing reserve market; Coordinated bidding; Electricity markets; Multi-market trading; Multi-stage stochastic programming; Uncertainty (search for similar items in EconPapers)
JEL-codes: C61 C63 D44 L94 Q40 Q41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:144:y:2025:i:c:s0140988325001392

DOI: 10.1016/j.eneco.2025.108316

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