An analysis of the electricity market and ways to control demand

In a broad sense, an electricity market is a system that facilitates the exchange of electricity-related goods and services. During more than a century of evolution of the electric power industry, the economics of the electricity markets had undergone enormous changes for reasons ranging from the technological advances on supply and demand sides to politics and ideology. A restructuring of electric power industry at the turn of the ۲۱st century involved replacing the vertically integrated and tightly regulated "traditional" electricity market with multiple competitive markets for electricity generation, transmission, distribution, and retailing. The traditional and competitive market approaches loosely correspond to two visions of industry: the deregulation was transforming electricity from a public service (like sewerage) into a tradable good (like crude oil). As of ۲۰۲۰s, the traditional markets are still common in some regions, including large parts of the United States and Canada. This paper is about electricity market operation when looking from the wind power producers’point of view. The focus in on market time horizons: how many hours there is between the closing and delivering the bids. The case is for the Nordic countries, the Nordpool electricity market and the Danish wind power production. Real data from year ۲۰۰۱ was used to study the benefits of a more flexible market to wind power producer. As a result of reduced regulating market costs from better hourly predictions to the market, wind power producer would gain up to ۸% more if the time between market bids and delivery was shortened from the day ahead Elspot market (hourly bids by noon for ۱۲–۳۶ h ahead). An after sales market where surplus or deficit production could be traded ۲ h before delivery could benefit the producer almost as much, gaining ۷%.

Keywords:

Wind power , Electricity market , Forecasting , Regulation market