Bidding wind energy under uncertainty

Abstract

The integration of wind energy into electricity markets implies that the wind energy must commit their production for a given time period. This requires the use of short term wind power prediction tools to prepare the bids for the spot market. The output of these tools have a limited accuracy, and, therefore, these predictions are uncertain. Optimal bids must take into account this uncertainty in order to get the maximum revenue from the sell of energy, minimizing losses due to imbalance costs. The consequence is that the optimal bids sent to the market do not coincide with the best predictions. Regulatory authorities must consider if this situation is good for the system operation, and encourage TSOs to have their own prediction tools and have results independent of bidding strategies.