Optimum bidding strategy for wind and solar power plants in day-ahead electricity market

Abstract

There are two possible strategies for wind power plants (WPPs) and solar power plants (SPPs) to maximize their income in day ahead markets (DAM) in the presence of imbalance cost: joint bidding (JB) via collaboration by participating to balancing groups and deployment of storage technologies. There are limited studies in the literature covering the comparative analysis of "JB strategy" with "battery deployment (BD) strategy". In the existence of balancing responsibility, the comparative analysis of these strategies is the main contribution of this study to the literature. Our Second contribution is the analysis of the impact of different regulatory regimes, which are set by the regulatory authority, on total income. JBM (joint bidding model), which is the model for joint bidding via different collaboration groups, is developed for the analysis of JB strategy, BDM (battery deployment model), which is the model covering the deployment of storage technology, is developed for the analysis of BD strategy. The impact of each strategy on total income is analyzed. According to the analysis of the results of the models, while JB strategy, which is sensitive to the regulatory regime, increases the total annual income of the collaboration groups up to 0.65%, BD strategy seems not feasible and financially viable. On the other hand, extra income values per MW of battery for SPP is between $218 and $400 /MW-year, while these values are between $2460 and $6795/MW-year for the group of 15 WPPs. Therefore, deployment of battery for WPPs creates extra income more than tenfold of that of SPP. BD strategy can be viable provided that the levelized cost of deployment of battery drops below the extra income values achieved per MW of battery.