Prediction errors and balancing costs for wind power production in Finland

In Finland, as there is no feed-in tariff, the wind power producers have to make contracts on how the electricity is sold and also make contracts for balance settlement. For this paper, wind power production is estimated 1–38 hours ahead for wind turbines located in 4 small clusters about 380 km apart on the West coast of Finland. Wind speed forecasts from the very-high-resolution ETA meteorological forecast model run by Foreca Ltd are used together with two production forecast models, which employ neural networks developed by Cybersoft and time series modeling by VTT. To show the effect of even more spread wind power production in Finland, prediction errors are determined for both one site, one producer and for the whole West Coast of Finland. Balancing costs resulting from day-ahead forecasts are estimated with year 2004 price data. Some example weeks are taken to examine the possibilities of improving the meteorological prediction for wind speeds.