Risk Analysis in Electricity Markets by using Decision Trees

This paper describes a procedure for medium-and long-term risk analysis by using decision trees. A market equilibrium model is presented in order to assess the impact of the different sources of uncertainty. Decision trees are defined and applied in a study case, showing the advantages of these techniques for medium-term operation and planning. The paper analyzes different scenarios of five main risk factors: hydro-inflows, fuel (coal and gas) costs, system demand, and CO
₂
emission price