Study of the Impact of Hydropower Production on Daily Market Electricity Prices

Abstract

The main goal of energy operators is not only to ensure a high-quality energy and a reliable supply, but also to reach a competitive market price for the supplied energy. In the past few years, with more agents entering the market and thus increasing the competition, the need for maximising revenues while keeping a competitive price has become a priority. In both Portugal and Spain, the presence of generation using renewable sources is very significant, so it is possible to affirm that renewable generation availability has a significant impact on market prices.With installed hydropower capacity growing every year, mostly due to its dynamic qualities and dispatchability (allowing it to enter the market), which is related to the predictability and management ability of the source (water), it becomes crucial to understand the influence that hydropower production has in electricity prices, in order to achieve better EPF. Despite the vast quantity of bibliography available, none or very few of it studies this matter.This Master thesis will then cover the relation between the hydropower production in the Iberian Peninsula, with more focus on Portugal, and the electricity prices in the Iberian Electricity Market (MIBEL).