Risk Management Strategies for a Wind Power Producer in Electricity Markets

Janghorbani, Mohammadreza; Shariatmadar, Seyed Mohammad; Amir, Vahid; Jolfaei, Mohammad Ghanbari; Madanimohammadi, Ali

doi:10.17485/ijst/2014/v7i8.2

Cited by 4 publications

(2 citation statements)

References 8 publications

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“…Currently, it is common to trade wind energy in competitive markets; however, market participants face risks due to the uncertainty of the wind (AlAshery and Qiao 2018). In order to mitigate these risks, there are studies that propose hedging strategies using artificial intelligence to generate electricity price scenarios (Janghorbani et al 2014), ARIMA models to simulate the price of electricity and wind speed; (Hosseini-Firouz 2013) and models that use virtual auctions (virtual bidding) for the sale of wind energy (Xiao et al 2022).…”

Section: Discussionmentioning

confidence: 99%

Risk Management in Electricity Markets: Dominant Topics and Research Trends

Londoño

Velásquez

2023

Risks

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Risk management in electricity markets is essential for decision making that involve uncertainty. This article researches the dominant themes and research trends in risk management in electricity markets using descriptive analysis, literature mapping, and data mining techniques. The proposed methodology generates the clusters within the dominant themes and provides a comprehensive view of the main authors, journals, and publications, as well as the main lines of research. The results reveal that the academic production of the subject is increasing and the research trends focused on financial risk management, energy resource management, and that climate coverage mechanisms are of great interest to the scientific community.

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Section: Discussionmentioning

confidence: 99%

Risk Management in Electricity Markets: Dominant Topics and Research Trends

Londoño

Velásquez

2023

Risks

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“…It is commonly believed that systematic planning and management of electricity generation will allow the electricity producers to maximize returns and especially minimise risks (Cunha & Ferreira, 2014). These advantages were also proven by Janghorbani et al (2014) since risks involved in a power plant can be systematically mitigated by good production management strategies that allow the power producers to obtain maximum profit.…”

Section: Risk Management In Power Plantsmentioning

confidence: 99%

Economic dispatch management of electric power plants for profit maximization

Chanjirawittaya

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The key strategy of power plant business in the deregulated electricity supply industry is to maintain profitability, especially for a private energy company that allows general public to take part in investment for business expansion. The right strategy move is to maximize profit from selling electricity and steam, at the same time fund intensive research and development programs to seek for new alternative energy in order to supplant limited fuels and lower cost of production. The corporate annual report revealed that the major source of revenue comes from the sales of electricity and steam; however, profit has continually declined over the past few years. Decreasing profit was partially due to external effects, such as monopolized pricing determination and volatile economic factors. The company is not allowed to proportionally adjust the prices of electricity and steam to changes in such effects. The executives identified that the main cause of decreases in profit is from independent production and operations management without economic dispatch applications among the power plants. Consequently, the company had to excessively stock up fuels and schedule unplanned maintenance, which resulted in lower productivity and incapability to deliver some outputs to the customer. A spreadsheet-based program was developed to help make a small-scaled managerial decision, how much electricity and steam should be generated and sold to each customer group during periods of peak hours and off-peak hours to achieve maximum profit without violating the sales contract agreements. Several quantitative determination processes for unit cost, prices and profits were constructed and later embedded in the spreadsheet program. The mathematical linear programming model for optimizing total profit during each of the periods was formulated. Two feasible scenarios for each of the periods were comparatively simulated to see the best alternative towards profit maximization. The simulation results show that the optimal scenario is applicable to both periods. Although some electricity demand could not be fully satisfied resulting in penalty, this scenario provided the total maximum profit and was able to satisfy the power systems and the legal constraints while not severely violating the sales contract agreements relative to another scenario. The results from sensitivity analysis of exchange rate, coal price, fuel oil price, coal-to-biomass fuel ratio and fuel transfer charge also show that all of these factors have strong effects on profitability, allowing to examine a series of possible changes that will not affect the optimal solution of economic dispatch management.

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A looming revolution: Implications of self-generation for the risk exposure of retailers

Russo

Bertsch

2020

Energy Economics

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Managing the risk associated with uncertain load has always been a challenge for retailers in electricity markets. Yet the load variability has been largely predictable in the past, especially when aggregating a large number of consumers. In contrast, the increasing penetration of unpredictable, small-scale electricity generation by consumers, i.e. self-generation, constitutes a new and yet greater volume risk. Using value-at-risk metrics and Monte Carlo simulations based on German historical loads and prices, the contribution of decentralized solar PV self-generation to retailers' load and revenue risks is assessed. This analysis has implications for the consumers' welfare and the overall efficiency of electricity markets.

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Risk Management Strategies for a Wind Power Producer in Electricity Markets

Cited by 4 publications

References 8 publications

Risk Management in Electricity Markets: Dominant Topics and Research Trends

Risk Management in Electricity Markets: Dominant Topics and Research Trends

Economic dispatch management of electric power plants for profit maximization

A looming revolution: Implications of self-generation for the risk exposure of retailers

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