Assessing new block order options of the EUPHEMIA algorithm: An optimization model for the economic dispatch problem in power exchanges

Abstract

To implement the process of European power markets’ integration, a market-clearing algorithm has been developed among European power exchanges under the title EUPHEMIA (Pan-European Hybrid Electricity Market Integration Algorithm), being a strictly economic dispatch algorithm and providing several options and products to market participants. This paper proposes an optimization-based methodological framework for the optimal economic dispatch problem in power exchanges, further enhancing the EUPHEMIA algorithm’s block order module. More specifically, through the development of a mixed-integer linear programming (MILP) model and utilizing an iterative process, it quantifies the impacts of the proposed new options to the optimal energy mix, the wholesale prices, and on the market players’ economic performance. The model considers all the current market products of the EUPHEMIA algorithm, as well as introduces new market products such as the flexibility provision of the main aspects of block orders (minimum acceptance ratio, price offer, and block time limits), the modification of existing block orders (exclusive groups), the development of new linkage structure (linked block orders with parallel relationship), as well as the activation of mixed schemes combining existing types of block orders into new integrated forms. The developed optimization framework has been assessed in the Greek interconnected power system, including its interconnections with neighboring power systems. The proposed methodological approach suggests a robust and systematic methodological formation to provide useful insights on policy issues and ongoing debate regarding the shaping of more efficient market designs and structures to deal with the new operational challenges of low-carbon flexible power systems.