Simulating the Influence of Wind Power Generation on the Electricity Market Price

Wind power has recently become quite popular among power generation companies all over the world. In the year 2003 alone 8,133MW of new installations have been built up.

When integrating these huge amount of wind power into an existing power grid and the trading process of a power utility on the electricity market, the uncertainty in wind power generation becomes a critical point. There are basically two viewpoints on this issue. First, operating wind power generation in a power grid needs a high amount of regulation reserve. Therefore wind generation is expensive. On the other hand, wind power generation does not consume fuel and therefore there are no fuel cost.

To estimate the consequences of high wind power generation we propose in this paper a simulation model that is capable of simulating spot and ancillary markets, as well as the physical aspects of electricity generation. By simulating the interaction between spot and ancillary market we calculate the development of the electricity prices on the spot market and the ancillary market with growing wind power generation.