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A Comparative Study of Machine Learning Algorithms for Electricity Price Forecasting with LIME-Based Interpretability

2025/12/01 by Xuanyi Zhao, Jiawen Ding, Zhao, Xuanyi +4
Engineering · #Electric Power System Optimization #Energy Load and Power Forecasting #FOS: Computer and information sciences #Machine Learning (cs.LG) #Smart Grid Energy Management

paper · pdf · doi:10.48550/arxiv.2512.01212

openalex publication_date 2025/12/01 · openalex created_date 2025/12/03 · openalex updated_date 2026/07/28

Abstract

With the rapid development of electricity markets, price volatility has significantly increased, making accurate forecasting crucial for power system operations and market decisions. Traditional linear models cannot capture the complex nonlinear characteristics of electricity pricing, necessitating advanced machine learning approaches. This study compares eight machine learning models using Spanish electricity market data, integrating consumption, generation, and meteorological variables. The models evaluated include linear regression, ridge regression, decision tree, KNN, random forest, gradient boosting, SVR, and XGBoost. Results show that KNN achieves the best performance with R2 of 0.865, MAE of 3.556, and RMSE of 5.240. To enhance interpretability, LIME analysis reveals that meteorological factors and supply-demand indicators significantly influence price fluctuations through nonlinear relationships. This work demonstrates the effectiveness of machine learning models in electricity price forecasting while improving decision transparency through interpretability analysis.

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