Decentralized Market Coupling with Taking Account Power Systems Transmission Network Constraints

Abstract

The chapter is devoted to the development of theoretical and methodological bases for assessing the impact of transmission network constraints on electricity exchange in the context of integration of electricity markets into the European electricity market. The chapter presents theoretical substantiations of models for assessing the impact of network constraints on the exchange of electricity through the electric section on the pricing processes in the electricity day-ahead market segment on the base of the decentralized market coupling concept. A general description of the existing methods of congestion management for market coupling is given. One of the most important and actual tasks of operability assurance of the day-ahead market is to determine the cross-border congestion management methods. The latter approach is more promising and actively developing now. The most known implementations of market coupling are the flow-based market coupling (FBC) and decentralized market coupling (DMC), including trilateral market coupling (TMC). The main FBC disadvantage is the necessity of linearization of electricity demand function. It prevents from adequately taking into account the demand and offer structure, which is generated from linear and discrete type bids. As a result, the wrong choices of increment of iterative process and the missing of the global extremum are possible. DMC uses mathematical apparatus of net export curves (NECs), which correctly reflect the potential of the export and import of electricity for a local market area in the common electricity market. However, the use of NEC is complicated in case of a coupling of more than two electricity markets. Also, there is the problem of the formal presentation of relations structure between the coupling markets. Approaches to the analysis of restrictions on the exchange of electricity by electric cross-section as a task of multi-purpose optimization of the welfare function of electricity market participants are formalized. Methods and models of analysis of processes of decentralized market coupling of a group of price zones of free configuration are given. The principles of solving practical problems of determining the optimal configuration of price zones in the day-ahead electricity market are considered. An example of assessing the feasibility of integrating a separate price zone of the Integrated Power System (IPS) of Ukraine into the European electricity market is shown.