Impact of electricity price forecasting errors on bidding: a price‐taker's perspective
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Date
2020-12
Publication Type
Journal Article
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Abstract
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. © 2020 The Institution of Engineering and Technology
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published
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Journal / series
Volume
14 (25)
Pages / Article No.
6259 - 6266
Publisher
Institution of Engineering and Technology
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Subject
pricing; power markets; linear programming; stochastic programming; electricity price forecasting; deregulated market; electricity market; power markets; bidding curves; multiparametric linear programming; forecasted prices; deterministic bidding models; stochastic bidding models; price forecasting error level; real‐market price data; predefined forecasting