Uncertainty and risk management in electricity market: Challenges and opportunities

During last two decades, power industry underwent major changes all over the world. One is regulatory reform towards distributed and competitive structure, in which market forces drive the electricity prices, and the other is a large share of renewable in total electricity generation mix. These bring in unpredictable future conditions i e. uncertainty in prices and volume of electricity at the time of planning. These significantly changed the traditional working of various entities in the power sector and raised many challenges and opportunities. This paper briefs some of the challenges and opportunities to major entities (generation companies, retailers, large consumer and system operators) of restructured power sector and highlights the necessity of uncertainty consideration and its various impacts from the perspective of different entities.