A Scenario Simulation Approach for Market Power Analysis in Hydrothermal Systems

This paper focuses on markets based on physical bilateral contracts combined with a power exchange (PX). The main feature to be analyzed is the behavior of the hydrothermal system where one or more companies have a big reservoir with capacity for interannual regulation. In this work, interannual regulation means the ability of a reservoir to allocate water from consecutive years. The use of the reservoirs in a context of a power exchange market with competition is the main objective of this study. Results on the Chilean central interconnected system using stochastic dynamic programming are presented and discussed.