Market-Based Bidding Strategy for Variable Renewable Generation in the MIBEL

This paper proposes a methodology for the assessment of the economic viability of wind and solar photovoltaic (PV) electricity generation participating in the Iberian Electricity Market (MIBEL) in equal terms with the remaining generators. This work details the remuneration and penalty mechanisms that are applied to RES generators with only market-based revenues participating in the Day-Ahead Market (DAM) of MIBEL. Moreover, this paper presents results from two case studies with RES producers without any kind of subsidies, one focused on a wind energy producer and another focused on a solar PV producer, directly participating in the MIBEL electricity market. Leveraging on probabilistic market scenarios, drawn from the joint distribution of day-ahead electricity prices and imbalance penalties for each hour of the day, the effects of forecast error and bidding strategy in the Net Present Value (NPV) are described and discussed as well as the impact of the current market design.