Mar 24 • 💻 Applied Modeling
Wholesale Electricity Price and Energy Storage Trading
The attached slide shows how the wholesale electricity price is structured.
As a reminder, electricity markets have two parts: wholesale and retail. Energy Storage trades in wholesale.
In the modelling of the wholesale electricity price we need to consider that there is a daily pattern where prices rise and fall during the day, a weekend effect where prices drop slightly over the weekend, a slow seasonal drift over the year, small random noise, and occasional large spikes.
So all these together make the wholesale electricity price.
This kind of modelling for the wholesale electricity price is a key part of energy storage analysis because revenue depends heavily on price patterns.
I am currently creating a new course which is in progress, where we use machine learning for energy storage trading.
I was part of a consulting project focused on the profitability of energy storage, and this type of price modelling is exactly what we use in practice.
The course will show step by step why we model prices this way, what each component means, and how to implement it in Python.
You can use the code directly and adapt it to your own work or consulting projects. This is also very useful for interviews since questions about energy storage and wholesale prices are very common. For example, you might be asked what drift is or how seasonal effects are modeled, and this course helps you clearly explain the why, what, and how.
It will be ready soon.
In the meantime, this attached slide illustrates the components of the wholesale electricity price.
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Wholesale Electricity Price and Energy Storage Trading
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