Strategic Bidding for Price-Taker Hydroelectricity Producers

This paper introduces a stochastic programming model that integrates strategic bids or offers for electricity (in quantities and prices) in a deregulated electricity market. The model is designed to maximize the profits of a producer of electricity who manages a series of power plants along a river. The model is compared with a previously reported stochastic model where the bidding process is disregarded. The superiority of the new model is empirically demonstrated on historical data.