Wind power participation in electricity markets — The role of wind power forecasts

Wind power forecasting is an important tool to better integrate wind power into different electricity market frameworks. In the case of a Portuguese wind producer participating in the day-ahead market, the forecast is based on the initial and boundary conditions (IC) from the meteorological global models at 06:00 UTC in the day before the operation. Consequently, this constitutes a gap of 18 hours between the IC and the first delivery hour. Taking into account the availability of meteorological global forecast models data, this work investigates the influence of this gap's reduction and the resultant certainty gain effect of using the IC provided by the models at times nearer to the first delivery hour to the day-ahead electricity market. The certainty gain is estimated by using a probabilistic wind power forecast methodology coupled with a 2-stage stochastic optimization model in order to provide the bid volumes for the day-ahead market that enable maximum profit with an acceptable risk to a wind power producer. Expected imbalance values considering the actual IC (6:00 UTC) and proposed IC's (12:00 and 18:00 UTC) are compared. The results obtained demonstrate that the IC used for the wind power forecast strictly determines forecast accuracy for the day-ahead market. Therefore, market adaptations are recommended to deal with the wind power variability and uncertainty avoiding negotiations on the adjustment and reserve markets at higher costs.