IMPACT OF FAST WIND FLUCTUATIONS ON THE PROFIT OF A WIND POWER PRODUCER JOINTLY TRADING IN ENERGY AND RESERVE MARKETS

Abstract

In light of the latest technological achievements in wind farm control, wind power producers (WPPs) are motivated to participate in the joint day-ahead energy and reserve market (JERM) so as to obtain additional revenue by offering ancillary services. However, their expected profit is potentially affected by fast fluctuations of the available wind power in real-time, which may prevent them to deliver the capacity offered at the day-ahead stage. In order to evaluate this impact, a stochastic framework aiming at maximizing the WPP's profit in the day-ahead JERM, based on hourly mean wind power forecasts, is firstly developed. Once the optimal bids are obtained, an empirical ex-post analysis is performed to assess the impact of actual wind speed fluctuations on the WPP's profit. Accordingly, the resulting revenue streams from the different market floors are separately compared to their related expected values, so as to determine the losses regarding the inability of both reserve capacity procurement and activation as well as deviations from the scheduled energy. The outcomes confirm that wind speed fluctuations have a significant impact on the WPP's ability to deliver the scheduled reserve, thus negatively impacting its actual profit.