The value of a pumping-hydro generator in a system with increasing integration of wind power

Abstract

Portugal established a strong commitment to increase the installed renewable capacity in order to decrease its external energy dependency. These goals are being achieved mainly due to increasing levels of wind power. One of the main characteristics of wind power is the inherent unpredictability and variability. By allowing the energy storage, pumped-hydro units are able to cope with this drawback, promoting the match between generation and consumption. This paper presents a model based on market prices to determine the optimal bidding strategies that enable the total profit maximization of a pumped-hydro unit. It is considered that this unit participates in the Iberian day-ahead electricity market and in the portuguese ancillary services market. The optimal bids of the unit were calculated for scenarios with different levels of wind energy in the day-ahead market. The results showed that most of the income of the pumped-hydro unit was obtained from the spinning reserve market.