Value of price dependent bidding for thermal power producers

The steady increase in the short-term trading of electricity through power exchanges has made the investigation of appropriate bidding strategies relevant. The goal of this paper is to quantify the difference between price-dependent and price-independent bidding strategies for thermal power producers. The two bidding strategies are evaluated for trading in the German-Austrian day ahead market. Optimal bidding decisions are found through two stochastic optimization models. The results indicate that the price-dependent bids outperform the price-independent bids by utilizing the flexibility in the generators to increase production in the case of price peaks and reduce production for price drops.