A newsvendor approach to energy imbalance mechanism in a day ahead electricity market
Author(s)
Advisor
Kocaman, Ayşe SelinDate
2017-06Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
We study an energy imbalance problem in a day ahead electricity market from
the perspective of a distribution company. This company commits to buy a certain
amount of electricity in the day ahead market the day before the actual
demand of its customers is realized and faces energy imbalance due to demand
uncertainty. This energy imbalance of the distribution company is penalized by
a mechanism which includes penalty parameters de ned by energy market regulatory
authorities. By developing a variant of the newsvendor model, we nd
the optimal commitment amount of the distribution company and analyze the
e ect of penalty parameters on this amount. We show that the way that penalty
parameters are selected in current practice may lead the distribution company to
underbid. With an empirical analysis performed on real data, we also show that
e ect of these penalty parameters could di er hourly, daily, seasonally, regionally
and according to sectoral demand pro les. Considering that the traditional policy
used to decide on the penalty parameters does not have a systematic approach,
in this paper, we present insights for distribution companies on the optimal commitment
decision as well as for the energy market regulatory authorities on how
to choose the penalty parameters.
Keywords:
Keywords
Day ahead electricity marketBalancing market
Power distribution company
Newsvendor model
Imbalance mechanism
Penalty parameters