Modeling the impact of a wind power producer as a price-maker

Wind energy is present in many countries throughout the world. The main types of wind sales in electricity markets are via regulated tariffs or pool-based markets. Production companies choose cost-effective options for selling wind energy, and some markets, like the Irish electricity market, use regulated tariffs to remunerate wind production. This paper aims to provide some answers to explain what effect wind offers may have in an electricity market if wind power producers participated in the day-ahead market without receiving any premium or aid. A price-maker optimization model is used to detect its effect on prices. The model encompasses energy offers by other technologies using residual demand curves and detailed modeling of wind imbalances. It is observed that wind acting as price-maker reduces electricity prices and the imbalance penalties help the system operator to reduce imbalances. A realistic case study using data from the Irish electricity market illustrates the methodology used comparing the effect of imbalance penalties in the models in terms of profit and total imbalance of the system.