MCP Forecasting and Risk Considered Genco's Bidding Strategies in Electricity Market

As one of the most important parts in power system, electricity price forecasting has been a crucial factor for the generation companies' (Genco) bidding strategies, through which Gencos can maximize their potential benefits. However, high income is always coupled with high risk, as electricity volatility, demand uncertainty, and bidding strategies of rivals. In this paper, a bidding strategy based on Market Clearing Price (MCP) forecasting and risk management theory is presented. A Genco's bidding behavior is modeled as a risky decision making process in which Genco aims to the higher profit with lower risk, and the bidding strategy for the Genco can be obtained by solving a risk-utility function. At the end of the paper, numerical testing results show that this method is effective.