Impact of Longer Stochastic Forecast Horizon on the Operational Cost of a Power System

Many decisions in the power system are based on the day-ahead forecasting of production and consumption. In the presence of storages and demand side management (together the “flexibility assets”) the day-ahead forecast horizon might not be enough for optimal utilization of these assets. This paper shows that by increasing the forecast horizon of wind power the operational costs in the power system of the Baltic Sea region can be reduced. As the forecast horizon increases the largest cost savings are on the fuel cost of mid-merit units, whereas for the base load units the longer forecast horizon increases the operational costs. Furthermore, as the forecast horizon approaches one week, the results indicate that the relative impact on the operational cost savings start to reduce. Therefore, the increase of the forecast horizon can run up against a limit, which after the forecasts may not contain any valuable information for decision making.