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Optimizing day-ahead bid curves in hydropower production

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Abstract

In deregulated electricity markets, hydropower producers must bid their production into the day-ahead market. For price-taking producers, it is optimal to offer energy according to marginal costs, which for hydropower are determined by the opportunity cost of using water that could have been stored for future production. At the time of bidding, uncertainty of future prices and inflows may affect the opportunity costs and thus also the optimal bids. This paper presents a model for hydropower bidding where the bids are based on optimal production schedules from a stochastic model. We also present a heuristic algorithm for reducing the bid matrix into the size required by the market operator. Results for the optimized bids and the reduction algorithm are analyzed in a case study showing how uncertain inflows may affect the bids.

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Authors and Affiliations

  1. Norwegian University of Science and Technology, Alfred Getz vei 3, 7491, Trondheim, Norway

    Ellen Krohn Aasgård

  2. SINTEF Energy Research, Sem Sælands vei 11, 7034, Trondheim, Norway

    Christian Øyn Naversen, Marte Fodstad & Hans Ivar Skjelbred

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  1. Ellen Krohn Aasgård
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  2. Christian Øyn Naversen
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  3. Marte Fodstad
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  4. Hans Ivar Skjelbred
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Correspondence to Ellen Krohn Aasgård.

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Aasgård, E.K., Naversen, C.Ø., Fodstad, M. et al. Optimizing day-ahead bid curves in hydropower production. Energy Syst 9, 257–275 (2018). https://doi.org/10.1007/s12667-017-0234-z

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  • DOI: https://doi.org/10.1007/s12667-017-0234-z

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