Strategies to fulfill medium-term objectives through short-term operation in competitive power markets

Abstract

This paper presents two different approaches in order to guarantee that short-term decisions made by a generation company taking part in a wholesale electricity market are consistent with its operation objectives formulated from a medium-term perspective. In particular, it shows how certain economic signals must be used so as to orient short-term decisions toward medium-term objectives. The paper focuses in the case of a generation company that establishes a minimum-market-share objective for the medium term, and shows the implications of the different guidelines that can be used in the short-term operation in order to achieve that objective.