INFLUENCE OF PRICE UNCERTAINTY MODELING ACCURACY ON BIDDING STRATEGY OF A MULTI-UNIT GENCO IN ELECTRICITY MARKETS

Abstract

In deregulated electricity markets, strategic bidding plays an important role in ageneration company's (GENCO's) profit maximization. A reasonable profit making biddingstrategy is presented in this paper, taking into account price uncertainty as well as generator costcharacteristics. Price uncertainty is considered through various statistical distributions, ensuringsuccess in bidding process with a specified degree of confidence. The screening curve, generallyused for economic evaluation of generating units in planning and operation studies, is utilized tocharacterize generator costs. The logically developed bidding strategy is implemented on aGENCO, that owns five different generating units. Fixed, variable and no load cost of generatingunits is taken into consideration to calculate GENCO profit. No load cost occurs when unit losesbid and cannot shutdown due to unit commitment constraints. Historical data of PJM electricitymarket is used to model price uncertainty. Finally, a comparative analysis is carried out to accessthe influence of accuracy of price uncertainty modeling on the GENCO profit.