Wind power producers are getting ready to participate in electricity markets as well as conventional units. This poses challenges to power system operators. Wind speed forecasting error increases power imbalance at real time operation, and hence, profits of wind power producers decrease due to balancing costs. A recently proposed scheme for reducing wind power plants power imbalance and increasing their profits is to team up each wind power producer with a non-wind generating firm. The joint firm participates in the market by bidding the joint supply function as a single unit. The objectives of this paper are 1) improving the efficiency of this scheme by considering both benefits and losses of positive and negative balancing prices, 2) determining the optimal generation capacity for the joined firm for maximum profitability of the scheme, and 3) performing sensitivity analysis on different parameters to determine the range of profitability of the scheme in different conditions. In order to evaluate the efficiency of the model, behavior of other generating firms should be known. To this end, supply function equilibrium model is used to determine the optimal behavior of generating firms considering their interactions. Performance of the improved scheme is discussed using a test system.

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