Optimal day-ahead electricity market bidding considering different ancillary services

This paper studies optimal bidding strategies for a hydropower producer in a day-ahead market and different regulation markets. It contains two case studies, analyzing the optimal production pattern considering a pre-spot situation taking different regulation markets into account. Both the optimal bid structure between the spot market and the primary regulation market in Switzerland as well as the spot market and the secondary regulation market in Norway were investigated. Models regarding both case studies were built, and the consistency of the analysis over an entire year was tested. The results illustrate how a small change in the utilization of the watercourse can be very lucrative when considering an additional regulation market, and discusses the importance of correctly calculated water values and profit factors with such ancillary services present.