Epsilon Archive for Student Projects

Abstract

The aim of the study is to investigate possibilities to manage forecast errors at the
Nordic power market based on the size of the actor. This is part of a larger question
at hand, whether the Nordic power market structure is suitable to support large wind
power installations.
An increased amount of wind power will unavoidably generate an increased amount
of forecast errors and raise the demand for adjustment and regulating power.
The investigation is carried out in three steps.
· First a scenario is created containing eight actors that is balance responsible for
varying size of wind power production. Forecast error volumes are modeled
associated with each actor in the scenario.
· Secondly, conditions at the intraday market and the regulating market during 2006
are investigated and the result is used as input for the next step.
· Last, price models are developed and used to calculate future imbalance costs
associated to each actor, and the cost saving potential in different options. Because
of uncertainties about the future intraday/regulating market situation, several
calculations are carried out with different perspectives for the model calibration,
different distributions of the forecast error volumes between the intraday market and
the regulating market, and different options for managing the forecasts error.
The results indicate that it is a major difference in the cost saving potential if the
forecast error is “sold” or if the adjustment is “bought”. The cost saving potential
differs significantly between the smaller and the larger actors.