European Electricity Day-Ahead Markets: A Review of Models and Solution Methods

Abstract

Recently, designing and clearing day-ahead electricity markets have received significant attention from both academia and practice alike. Together with the increasing penetration of intermittent renewables to the electricity supply mix, efficiently designing and clearing day-ahead electricity markets have become a central concern for policy makers in Europe. Although the literature is expanding significantly, our review indicates that the research in the area is relatively fragmented. In view of this, we provide a structured review of the day-ahead markets in Europe by unifying three building blocks: current market models, the optimization techniques used to clear those markets and the directions of future research in market design and market clearing approaches. This paper is the first exhaustive review of exchange-type day-ahead electricity markets in Europe to take both the theoretical and technical aspects of the problem into account from both operational and strategic perspectives.