Using artificial neural networks to predict short-term wholesale prices on the Irish Single Electricity Market

2016 
Electricity markets are different from other markets as electricity generation cannot be easily stored in large amounts and in order to avoid blackouts, the generation of electricity must be balanced with customer demand for it on a second-by-second basis. Customers tend to rely on electricity for day-to-day living and cannot replace it easily so when electricity prices increase, customer demand generally does not reduce significantly in the short-term. As electricity generation and customer demand must be matched perfectly second-by-second, and because generation cannot be stored to a large extent, cost bids from generators must be balanced with demand estimates in advance of real-time. This paper outlines a a forecasting algorithm built on artificial neural networks in order to predict short-term (72 hours ahead) wholesale prices on the Irish Single Electricity Market so that market participants can make more informed trading decisions. Research studies have demonstrated that an adaptive or self-adaptive approach to forecasting would appear more suited to the task of predicting energy demands in territory such as Ireland. Implementing an in-house self-adaptive model should yield good results in the dynamic uncertain Irish energy market. We have identified the features that such a model demands and outline it here.
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