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How to Sell Renewable Electricity - Interactions of the Intraday and Day-ahead Market under Uncertainty

Author

Listed:
  • Knaut, Andreas

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Obermüller, Frank

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

Abstract

Uncertainty about renewable production increases the importance of sequential short-term trading. We consider a two-stage market where conventional and renewable producers compete in order to satisfy the demand of consumers. The trading in the first stage takes place under uncertainty about production levels of renewable producers, which can be associated with trading in the day-ahead market. In the second stage, which we consider as the intraday market, uncertainty about the production levels is resolved. Our model is able to capture different levels of flexibility for conventional producers as well as different levels of competition for renewable producers. We find that it is optimal for renewable producers to sell less than the expected production in the day-ahead market. In situations with high renewable production it is even profitable for renewable producers to withhold quantities in the intraday market. However, for an increasing number of renewable producers, the optimal quantity tends towards the expected production level. More competition as well as a more flexible power plant fleet lead to an increase in overall welfare, which can even be further increased by delaying the gate-closure of the day-ahead market or by improving the quality of renewable production forecasts.

Suggested Citation

  • Knaut, Andreas & Obermüller, Frank, 2016. "How to Sell Renewable Electricity - Interactions of the Intraday and Day-ahead Market under Uncertainty," EWI Working Papers 2016-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    • Handle: RePEc:ris:ewikln:2016_004
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Johanndeiter, Silke & Bertsch, Valentin, 2024. "Bidding zero? An analysis of solar power plants’ price bids in the electricity day-ahead market," Applied Energy, Elsevier, vol. 371(C).
    2. Knaut, Andreas & Paschmann, Martin, 2017. "Decoding Restricted Participation in Sequential Electricity Markets," EWI Working Papers 2017-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 31 Aug 2017.
    3. Dressler, Luisa, 2016. "Support schemes for renewable electricity in the European Union: Producer strategies and competition," Energy Economics, Elsevier, vol. 60(C), pages 186-196.
    4. Spodniak, Petr & Ollikka, Kimmo & Honkapuro, Samuli, 2019. "The Relevance of Wholesale Electricity Market Places: The Nordic Case," Working Papers 126, VATT Institute for Economic Research.
    5. Spodniak, Petr & Ollikka, Kimmo & Honkapuro, Samuli, 2019. "The Relevance of Wholesale Electricity Market Places: The Nordic Case," Working Papers 126, VATT Institute for Economic Research.
    6. Knaut, Andreas & Paschmann, Martin, 2017. "Price Volatility in Commodity Markets with Restricted Participation," EWI Working Papers 2017-2, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    7. Spodniak, Petr & Ollikka, Kimmo & Honkapuro, Samuli, 2021. "The impact of wind power and electricity demand on the relevance of different short-term electricity markets: The Nordic case," Applied Energy, Elsevier, vol. 283(C).
    8. Knaut, Andreas & Paschmann, Martin, 2019. "Price volatility in commodity markets with restricted participation," Energy Economics, Elsevier, vol. 81(C), pages 37-51.
    9. Paschmann, Martin, 2017. "Leveraging the Benefits of Integrating and Interacting Electric Vehicles and Distributed Energy Resources," EWI Working Papers 2017-11, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    10. Obermüller, Frank, 2017. "Explaining Electricity Forward Premiums - Evidence for the Weather Uncertainty Effect," EWI Working Papers 2017-10, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    11. Rintamäki, Tuomas & Siddiqui, Afzal S. & Salo, Ahti, 2020. "Strategic offering of a flexible producer in day-ahead and intraday power markets," European Journal of Operational Research, Elsevier, vol. 284(3), pages 1136-1153.
    12. Hohl, Cody & Lo Prete, Chiara & Radhakrishnan, Ashish & Webster, Mort, 2023. "Intraday markets, wind integration and uplift payments in a regional U.S. power system," Energy Policy, Elsevier, vol. 175(C).

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    More about this item

    Keywords

    Cournot Competition; electricity markets; day-ahead market; intraday market; competition under uncertainty;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices

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