Open AccessImpact of electricity price forecasting errors on bidding: a price‐taker's perspective
Author(s) -
Zheng Kedi,
Wen Bojian,
Wang Yi,
Chen Qixin
Publication year - 2020
Publication title -
iet generation, transmission and distribution
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.92
H-Index - 110
eISSN - 1751-8695
pISSN - 1751-8687
DOI - 10.1049/iet-gtd.2020.1188
Subject(s) - bidding , revenue , electricity market , econometrics , electricity , economics , electricity price forecasting , market price , computer science , electricity price , microeconomics , finance , engineering , electrical engineering
Electricity price forecasting is very important for market participants in a deregulated market. However, only a few papers investigated the impact of forecasting errors on the market participants' behaviours and revenues. In this study, a general formulation of bidding in the electricity market is considered and the participant is assumed to be a price‐taker which is general for most of the participants in power markets. A numerical method for quantifying the impact of forecasting errors on the bidding curves and revenues based on multiparametric linear programming is proposed. The forecasted prices are regarded as exogenous parameters for both deterministic and stochastic bidding models. Compared with the existing method, the proposed method can calculate how much improvement will be achieved in the cost or revenue of the bidder if he reduces the price forecasting error level, and such calculation does not require any predefined forecasting results. Numerical results and discussions based on real‐market price data are conducted to show the application of the proposed method.