Assessment of the cost associated with wind generation prediction errors in a liberalized electricity market

In this paper, a probabilistic methodology for estimating the energy costs in the market for wind generators associated with wind prediction errors is proposed. Generators must buy or sell energy production deviations due to prediction errors when they bid in day-ahead or hour-ahead energy markets. The prediction error is modeled through a probability density function that represents the accuracy of the prediction model. Production hourly energy deviations and their associated trading costs are then calculated. Three study cases based on real wind power installations in Spain are analyzed. The three study cases show that the error prediction costs can reach as much as 10% of the total generator energy incomes.