Study of impacts, of physical contracts and financial contracts on bidding strategies of GENCOs

This paper studies the impacts of physical contracts and financial contracts on the bidding strategies of GENCOs, including Physical Bilateral Contracts, Contracts for Difference (CfDs), Call Options and Put Options under discriminatory pricing mechanism. The integrated bidding decision model is applied, which has three main modules-probabilistic local marginal price simulator, market-oriented unit commitment model and multi-criteria decision system. The numerical results show that the GENCO will choose different bidding strategies if it holds different types of contract. The results also suggest that CfDs have the best performance for risk alleviation. (C) 2004 Elsevier Ltd. All rights reserved.