Excessive price reduction and extreme volatility in wind dominant electricity markets; solutions and emerging challenges

Seyed-Mostafa Farashbashi-Astaneh, Zhe Chen, Omid Alizadeh Mousavi

Research output: Contribution to book/anthology/report/conference proceedingArticle in proceedingResearchpeer-review

4 Citations (Scopus)

Abstract

High intermittency in the nature of wind power emphasize conceptual revising in the mechanisms of electricity markets with high wind power penetration levels. This paper introduces overmuch price reduction and high price volatility as two adverse consequences in future wind dominant electricity markets. While high price volatility imposes elevated risk levels for both electricity suppliers and consumers, excessive price reduction of electricity is a disincentive for investment in new generation capacity and might jeopardizes system adequacy in long term. A comparative study between marginal to discriminatory pricing mechanisms are conducted in this paper. This particular direction has been chosen because the discriminatory approach is traditionally known for lowering price volatility while gently increasing average price. To this end an adaptive agent based simulator under two pricing mechanisms is developed. The paper indicates discriminatory pricing approach can be beneficial in high penetration of wind power because it alleviates high price variations and spikiness in one hand and prevents overmuch price reduction in wind dominant electricity markets on the other hand.
Original languageEnglish
Title of host publicationProceedings of the 2013 IEEE Power and Energy Society General Meeting (PES)
Number of pages5
PublisherIEEE Press
Publication date2013
ISBN (Electronic)9781479913015, 978-1-4799-1303-9
DOIs
Publication statusPublished - 2013
EventEuropean Conference on Power Electronics and Applications, EPE 2013 - Lille, France
Duration: 3 Sept 20135 Sept 2013
http://www.epe2013.com/

Conference

ConferenceEuropean Conference on Power Electronics and Applications, EPE 2013
Country/TerritoryFrance
CityLille
Period03/09/201305/09/2013
Internet address
SeriesIEEE Power and Energy Society General Meeting
ISSN1944-9925

Keywords

  • Agent-based simulation
  • Discriminatory pricing
  • Expected revenue
  • Intermittent sources
  • Marginal pricing

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