Strategic bidding in power market: ramp rate considerations

In a deregulated power market, power suppliers have more freedom and options to bid their price-energy curves and operational parameters such as ramp up and ramp down rates, etc. so long as the bids for these parameters do not exceed the actual capacities of the power facilities. The suppliers ability/commitment to provide spinning reserve, which represents the contribution to maintain the system security, can be adjusted by the ramp up rates submitted by the suppliers. This paper presents a strategic bidding strategy with respect to ramp up rate in a deregulated environment where the power balance and spinning reserve requirement are considered simultaneously. As the system security must be maintained, the market outcome for commitment depends on the power suppliers bids in terms of both the price-energy curves and the ramp rates which represent the ability to provide spinning reserve. The benefit gained by a supplier is related not only to its price-energy curve but also to its ramp rates, especially when the market size is limited, and it is possible for a supplier to estimate some information on the system operation and other suppliers. In this paper, the effect of ramp up rate bids on the market outcome is analyzed. A criterion with respect to ramp up rate bid to assess the outcome of the competition among suppliers is derived. A method is proposed to optimize the benefit from the viewpoint of a supplier by fine-tuning its bids for ramp up rate and price while ensuring its success in competition with other competitors for commitment. A numerical example is presented to show the effect of ramp up rate on a supplier´s benefit and the effectiveness of the proposed bidding strategy