*3.2. Bid Preparation and Energy Deviations*

The participation of VRE producers in balancing markets involves the preparation and submission of bids, typically for a period of one hour, creating large difficulties for producers to keep a stable and efficient operation without curtailments or deviations. Specifically, WPPs need to bid their expected active power, *Pbid*(*T*), in day-ahead and intra-day markets, based on forecasts that use time horizons between 18 h and 42 h (for DAMs), and between 2 h and 7 h (for intra-day markets), ahead of real-time operation. At real-time, considering the data obtained from wind parks, there is the possibility to compute the average production, *Pavg*(*T*), for a particular period of time *T*.

From the point of view of the grid, WPPs produce instantaneous power, *p*(*t*), based on the wind speed, the characteristics and power of wind turbines and the configuration of wind parks. The energy, *E*(*T*), produced during a period of time *T*, is computed as follows:

$$E(T) = \int\_0^T p(t)dt = T \times P\_{\text{avg}}.\tag{1}$$

The deviation, *Edev*(*T*), in period *T* is given by the following formula:

$$E\_{d\sigma\eta}(T) = T \times P\_{\text{avg}} - T \times P\_{\text{bind}} = T(P\_{\text{avg}} - P\_{\text{bind}}) \,. \tag{2}$$

Figure 1 illustrates the relation between these variables for a particular hour of operation (*T* = 1). It shows the traded/scheduled power, *Pbid*(*T*), of a particular wind power producer in the day-ahead market (red curve). The corresponding energy, *Ebid*(*T*), is represented by the orange area. The real production of the wind power producer is given by *p*(*t*) (solid blue curve). The difference between the instantaneous power and the scheduled power gives the energy deviation, *Edev*(*T*), which is represented by the light blue area.

**Figure 1.** Bids of wind power producers and the associated deviations.

Considering now that wind power producers are allowed to make only single bids in the balancing market (i.e., bids without considering aggregation of WPPs), the maximum expected power that they can submit, *PBMbid*(*T*), is defined by the difference between the minimum instantaneous deviation and the traded power:

$$P\_{BMbid}(T) = (-1)^{\varepsilon} \times \left( \min\left( |p(t)| \right) - P\_{bid}(T) \right) \tag{3}$$

where *t* = 1, ... , 60, and the bid is of the type upward regulation, i.e., *c* = 0 (for a downward regulation bid, consider the maximum instead of the minimum, and *c* = 1).

Figure 1 shows that the submission of *PBMbid*(*T*) to the balancing market, and its subsequent acceptance by the system operator, results in a waste of energy (the difference between the dashed and solid blue curves). For the particular case of the secondary reserve market, the waste of energy may be even larger than that. Accordingly, existing products associated with the balancing market may not be considered adequate to deal with the variability and uncertainty of VRE. A possible solution to overcome the problem is to consider aggregated bids involving VRE producers and conventional generation. However, not all power systems allow aggregated bids, specially for the case of BMs.
