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4.2 Impacts of IL Trigger Price on Market Equilibrium
When Q =20MW, b =0.8( MW ) 2 h/$, the variations of the mean value and the
standard deviation of the equilibrium market price with increasing the IL trig-
ger price are illustrated in Fig.3, where the impacts of the uncertainty of wind
power output is considered. It can be observed that both the equilibrium market
price and its volatility will be lowered with decreasing the IL trigger price. This
is because the possibility to exercise the IL contract increases with decreasing
the IL trigger price. Especially when the uncertainty of wind power output is
relatively large, this effect is more obvious because the possibility to exercise
the IL contract will be relatively large for more uncertain demand. In addition,
as the IL trigger price increases, the possibility to exercise the IL contract will
decrease, thus the impact of the IL contract will be weakened. These results
demonstrate that the IL trigger price in the IL contract should be determined
carefully to achieve the target of lowering market price and its volatility. Espe-
cially, when the standard deviation of wind power output is relatively large, a
relatively low trigger price can reduce the market price and its volatility more
effectively.
Fig. 3. Impact of IL trigger price on the mean value of equilibrium market price and
on the standard deviation of market price
5Conluon
The impacts of IL programs on the equilibrium outcomes of electricity wholesale
markets with wind power and the generators' risk are examined by proposing
a Cournot equilibrium model, in which the IL programs are considered in the
market demand model. The simulation results show that: (i) The introduction
of the IL programs can reduce the equilibrium market price and its volatility.
Especially when the uncertainty of wind power output is relatively large, this
effect is more obvious. Nowadays, it is well known that the integration of wind
power asks for more flexibility of power systems. This result shows that the IL
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