Environmental Engineering Reference
In-Depth Information
It is important that objective systems only accept observations that are likely to be cor-
rect. They must lie within an a priori defined uncertainty interval or be discarded.
Spurious waves in an objective system are worse than no waves, even if they would be
correct, because the user does often not know of the source of the observations and it may
be difficult to trace back. It is therefore most important in the design of the optimisation
tool that the end-user can work with and define a robust set of boundary conditions and
can explore the sensitivity of the solution to a number of incidents that are each relatively
unlikely events.
4.2.
The “Price Maker” Optimisation Problem
If the optimisation target is to predict an optimal price in an area between two market
systems with a price difference due to a limited interconnection capacity between the two
markets, it is considered a “price maker problem”. This is because the energy would flow
from the low price area to the high price area and the BRP would try to sell the energy in the
direction of the high price area like other participants and there would be some likelihood
of congestion on the line.
The “price maker” must therefore continuously predict the price of the neighbouring
areas with more inertia and try to trade in the direction of the highest price. This involves
usage of weather forecasting on larger scales and computation of demand and intermittent
energy generation. In this case, it is no longer sufficient to just predict what may be correct
for the BRP itself. Other market participants might have access to different forecast infor-
mation and may conclude very different or similar scenarios. This is thus an application,
where ensemble forecasting is helpful. Depending on the ensemble spread, the likelihood of
high or low competition can be determined and therefore also the price level on the market.
The weather determines the upper limit for what the BRP can sell. Before gate closure
a decision has to be taken on the basis of weather forecast information. However, the BRP
may decide to sell less or more than he expects to be produced, depending on the likelihood
of the weather and the expected balancing costs. The “price maker” is likely to also cause
the bulk of the imbalance and therefore also the bulk of the balancing costs. The “price
makers” sign of the error will correlate with the sign of the total imbalance. This means
that the error in every settlement interval counts as a cost, while this is not so for the “price
taker” party whose sign is maybe 50% opposite to the ”price makers” sign. The BRP has
therefore an incentive to keep the balancing costs at zero and let other parties carry the
balancing costs. The BRP can achieve this by using the ensemble minimum as a safe base
generation. However, this principle leaves some excess energy at times, that needs to be
traded with short notice on average under the sport market price scheme.
4.3.
The “Price Taker” Optimisation Problem
A small pool (in MW) can be traded and optimised with a so called “price taker” policy.
This means, that the pool does not necessarily need price predictions, but only needs to
keep the generation profiles according to their schedule. The “price taker” can assume a
diurnal cycle of the demand and a pricing that follows this pattern. As a refinement, the
“price taker” can try to predict the generation profile of competing intermittent generation
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