The effects of multi-temporal electricity markets on short- and long-term bidding

In this paper we discuss the generator investment problem for a newly proposed energy-only market structure comprising both spot and forward sub-markets as an alternative long-term resource adequacy solution. The investment problem is modeled as stochastic dynamic programming problem for a profit maximizing generator over a long time horizon. The long-term growth and short-term deviation of demand are represented as stochastic processes. The spot market is modeled as bilevel non-cooperative game and the forward market is formulated based on mean-variance criteria and market equilibrium arguments. The interrelated dynamics of different markets and its effect on investment decision and profitability of market participants are analyzed and comparisons with other market structures such as spot only energy markets are investigated as well.