Daniel, can an infra-marginal player in general tend to under-commit in forward markets (or schedules) - which will tend to create upward pricing pressure... and then show up in RTM or intra-day markets with the rest of the quantity ? Assuming the extra production is accepted, will this be higher profits than just committing all production in day ahead markets?
Yes, some participants play games like that. It only works if they have market power. If the market is truly competitive (i.e., lots of participants), it does not work. Regulators are there to clamp down on market power.
@@danielkirschen2893 Thanks Daniel. Curious -- one more followup qn. Even if there are many infra-marginal players, i.e. the market is "competitive", will the very fact that they are infra-marginal, and potentially must-run (eg: renewables) lead to an incentive to withhold some supply in DAM {i.e. vary the allocations between DAM and ID}. Even if a non-trivial random number of infra-marginals do this, it may lead to aggregate price pressures upwards in DAM which more than compensates the likely lower price realization in ID markets. This only works if the ID or RTM markets are liquid enough to absorb the incremental supply, and/or there is no security related curtailment, and/or the price realization on ID is not too depressed.
@@shivkuma100 If there are enough participants, I don't think that would work for long because some of them will realize that there is more money to be done on the DAM.
Daniel, can an infra-marginal player in general tend to under-commit in forward markets (or schedules) - which will tend to create upward pricing pressure... and then show up in RTM or intra-day markets with the rest of the quantity ? Assuming the extra production is accepted, will this be higher profits than just committing all production in day ahead markets?
Yes, some participants play games like that. It only works if they have market power. If the market is truly competitive (i.e., lots of participants), it does not work. Regulators are there to clamp down on market power.
@@danielkirschen2893 Thanks Daniel. Curious -- one more followup qn. Even if there are many infra-marginal players, i.e. the market is "competitive", will the very fact that they are infra-marginal, and potentially must-run (eg: renewables) lead to an incentive to withhold some supply in DAM {i.e. vary the allocations between DAM and ID}. Even if a non-trivial random number of infra-marginals do this, it may lead to aggregate price pressures upwards in DAM which more than compensates the likely lower price realization in ID markets. This only works if the ID or RTM markets are liquid enough to absorb the incremental supply, and/or there is no security related curtailment, and/or the price realization on ID is not too depressed.
@@shivkuma100 If there are enough participants, I don't think that would work for long because some of them will realize that there is more money to be done on the DAM.