As wind power penetration increases, understanding its potential to exercise unilateral market power is critical. This dynamic is particularly relevant in systems like the Colombian wholesale electricity market, which is characterized by a strong dependence on reservoir-based hydropower and a concentrated oligopolistic structure. However, evaluating the threshold where a renewable generator transitions from a price-taker to a price-setter remains challenging. This article explores this strategic transition and its market implications. By isolating a wind agent’s actions against a competitive hydro-thermal fringe using a discretized bi-level approach, we analyze how physical capacity withholding strategies might evolve under varying wind availability and system stress. The findings suggest that wind market power operates across three dynamic regimes: (i) a defensive “Price-Support” strategy during low demand, where capacity may be withheld to prevent price collapses; (ii) a “Scarcity Creation” tipping point during peak demand (observed around a 20% wind availability factor), which appears to incentivize fractional withholding to force expensive thermal dispatch; and iii) a return to “Volume Maximization” when abundant wind renders manipulation economically suboptimal. Ultimately, these results indicate that renewable market power is highly transient and conditional on meteorological profiles, suggesting that regulators could benefit from shifting toward predictive, weather-driven market surveillance.
Pérez et al. (Sat,) studied this question.