Optimal regulating power market bidding strategies in hydropower systems

University dissertation from Stockholm : KTH

Abstract: Unforeseen changes in production or consumption in power systems lead to changes in grid frequency. This can cause damages to the system, or to frequency sensitive equipment at the consumers. The system operator (SO) is the responsible for balancing production and consumption in the system. The regulating market is the market place where the SO can sell or purchase electricity in order to balance unforeseen events. Producers acting on the regulating market must be able to change their production levels fast (within minutes) when required. Hydropower is therefore suitable for trading on the regulating market because of its flexibility in power production. This thesis describes models that hydropower owners can use to generate optimal bidding strategies when the regulating market is considered.When planning for trading on the market, the prices are not known. Therefore, the prices are considered as stochastic variables. The planning problems in this thesis are based on multi-stage stochastic optimization, where the uncertain power prices are represented by scenario trees. The scenario trees are generated by simulation of price scenarios, which is achieved by using a model based on ARIMA and Markov processes. Two optimization models are presented in this thesis:' Model for generation of optimal bidding strategies for the regulating market.' Model for generation of optimal bidding strategies for the spot market when trading on the regulating market is considered.The described models are applied in a case study with real data from the Nordic power system.Conclusions of the thesis are that the proposed approaches of modelling prices and generation of bidding strategies are possible to use, and that the models produces reasonable data when applied to real data.

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