Validation of a strategic bidding model within the Spanish sequential electricity market

Abstract

A number of strategic bidding models have been developed to optimize the generation resources of an agent operating in an electricity market. A model to be applied to a real electricity market must comply with the following requirements: (a) must take into account both energy and ancillary services markets, (b) must include all technical and economic reality of the thermal, hydro and pumped-storage units of the agent, and the real operating rules of the market where it is applied, (c) must take into account the oligopolistic nature of the agent, (d) must be formulated as an stochastic optimization model in order to obtain optimal pairs quantity-price that will be used to build the bid, and (e) must be solved in a limited computation time incorporating all the generating units of the agent. These requirements cause that very few of the published strategic bidding models within the literature demonstrate its applicability to a real electricity market, showing results only to small unreal. case studies. This paper shows the real applicability of a strategic bidding model that complies with the aforementioned characteristics to a real day of operation of a real medium size agent operating in the Spanish sequential electricity market. Results will show that the use of a strategic bidding model can increase the income that the real agent obtains in the Spanish electricity market.