Transmission Capacity Allocation Research Articles

Regulatory incentives for transmission system operators under flow-based market coupling

Flow-based market coupling is a critical element of the electricity market in Europe. Transmission System Operators determine the commercial transmission capacity that can be implicitly traded in a zonal day-ahead market. However, this entails a trade-off: higher commercial transmission capacities increase market efficiency, affecting the electricity market prices, but also increase redispatch costs, affecting the network tariff. The decision on the commercial transmission capacity should optimally balance day-ahead welfare and redispatch costs, but depends on the rules and regulated incentives enforced on the TSOs. A MinRAM criterion, i.e., imposing minima for the commercial transmission capacity, is a one-size-fits-all policy without variation in time and space that unlikely leads to optimal transmission capacity allocation and is hard to tune because regulators have incomplete information. Incentive regulation is an alternative policy instrument promoting welfare-maximizing commercial transmission capacities, robust against information asymmetry. We provide a set of mathematical conditions to properly design an incentive scheme that rewards price convergence and penalizes excessive redispatch costs. Therefore, this paper serves as a stepping stone towards tapping the full potential of cross-border trade in zonal markets for policymakers, regulators, TSOs and market participants.

The calculation and optimal allocation of transmission capacity in natural gas networks with MINLP models

The transmission capacity of gas pipeline networks should be calculated and allocated to deal with the capacity booking with shippers. Technical capacities, which depend on the gas flow distribution at routes or interchange points, are calculated with a multiobjective optimization model and form a Pareto solution set in the entry/exit or point-to-point regime. Then, the commercial capacities, which can be directly applied in capacity booking, are calculated with single-objective optimization models that are transformed from the above multiobjective model based on three allocation rules and the demand of shippers. Next, peak-shaving capacities, which are daily oversupply or overdelivery amounts at inlets or deliveries, are calculated with two-stage transient optimization models. Considering the hydraulic process of a pipeline network and operating schemes of compressor stations, all the above models are mixed-integer nonlinear programming problems. Finally, a case study is made to demonstrate the ability of the models.

Benefits of regional coordination of balancing capacity markets in future European electricity markets

In the face of growing balancing requirements, there is increased interest in cross-border coordination of balancing capacity markets. Despite improved coordination of balancing energy, only limited progress has been made on coordinating balancing capacity procurement and sizing. That is in part because the coordination of procurement and sizing is more complex as it requires the reservation of cross-zonal transmission capacity. In this paper, a model to simulate a joint day-ahead energy and balancing capacity market clearing is presented, with coordinated procurement and sizing of balancing capacity, and co-optimized allocation of cross-zonal transmission capacity. We apply this model to a highly renewable Central Western European-based case study to illustrate how regional coordination of balancing capacity markets generates benefits. Results show that balancing capacity coordination enables a more cost-effective day-ahead scheduling of electricity production. Notably, the scheduling of peak-load technologies is impacted. Potentially, the greatest benefit of balancing capacity coordination lies in its ability to substantially reduce the need for back-up capacity. Sharing infrequently used generation capacity across borders rather than having individual self-sufficient control areas, especially when paired with alternative sources of balancing capacity (e.g., demand response), could greatly reduce generation capacity needs.

The capacity allocation method of European electricity market and its implications for China

Nowadays, the transaction scale of the cross-provincial electricity market in China has increased, and the problem of transmission capacity allocation attracts the government’s attention. During the development of the European unified electricity market, capacity allocation methods based on bidding zones such as Available Transfer Capacity (ATC) and Flow-Based Market Coupling (FBMC) have realized regional market coupling and improved grid utilization. This article intends to analyze the allocation methods of transmission capacity in the European electricity market, focusing on the comparison between the ATC and the FMBC, considering the actual background of the Chinese electricity market, especially the differences between the Chinese market and the European market in the grid structure and marketization process, it is more suitable to adopt ATC in China and it makes the suggestion for the application of the capacity allocation method. Besides, the idea of bidding zone simplification is also worth learning. It is also recommended that provincial institutions exchange data related to capacity allocation to coordinate the calculation of trading domains.

An analysis of zonal electricity pricing from a long-term perspective

In an era of energy transition, it is crucial to ensure that the design of the short-term electricity market provides sufficient cash flows to producers so as to allow the investment of the right technology at the right location. In this paper, we revisit the question of capacity allocation in zonal markets from a long-term perspective. We model the capacity expansion problem in zonal markets in which inter-zonal transmission capacity allocation is organized through flow-based market coupling, which is an approximation of power flow equations in aggregate networks that is employed in European market design. We demonstrate that the classical result of equivalence between centralized and decentralized formulations in transmission-constrained markets ceases to hold in this case. We propose a model of the decentralized capacity expansion problem with flow-based market coupling as a generalized Nash equilibrium that we formulate as a linear complementarity problem. We then perform simulations of the capacity expansion problem with nodal pricing and three variations of zonal pricing on a realistic instance of the Central Western European network and comment on the impacts of flow-based market coupling on investment.

Transmission Capacity Allocation in Zonal Electricity Markets

An OR look into zonal integration of electricity markets

Dynamic Reserve and Transmission Capacity Allocation in Wind-Dominated Power Systems

The large shares of wind power generation in electricity markets motivate higher levels of operating reserves. However, current reserve sizing practices fail to account for important topological aspects that might hinder their deployment, thus resulting in high operating costs. Zonal reserve procurement mitigates such inefficiencies, however, the way the zones are defined is still open to interpretation. This paper challenges the efficiency of predetermined zonal setups that neglect the location of stochastic power production in the system, as well as the availability, cost and accessibility of flexible generating units. To this end, we propose a novel reserve procurement approach, formulated as a two-stage stochastic bilevel model, in which the upper level identifies a number of contiguous reserve zones using dynamic grid partitioning and sets zonal requirements based on the total expected operating costs. Using two standard IEEE reliability test cases, we show how the efficient partitioning of reserve zones can reduce expected system cost and promote the integration of stochastic renewables.

MBO-Based Bandwidth Allocation and Traffic Coloring Optimization in PON

Abstract Passive optical network (PON)-supported orthogonal frequency-division multiplexing is viewed as a capable answer designed for subsequent generation optical networks in terms of traffic coloring when integrated with monarch butterfly optimization (MBO). Traffic coloring optimization (TCO) or MBO algorithmic rule solves the matter of controlling the traffic, began by end-user transceivers with multiple parameters through rescheduling transmission capacity and bandwidth allocation strategy of the optical network, which are done by means of its operator functions. The TCO method with granularity adjustment components outcome signifies an improvement in quality of service as it reduces jitter and increases throughput in PON by 350 µs and 12.5 %, respectively. It even improves the blocking probability and fairness index.

Robust gateway placement in wireless mesh networks

Wireless mesh networks (WMNs) are communication networks that provide wireless Internet access over areas with limited infrastructure. Each node in a WMN serves several clients in its coverage area and transfers their traffic over wireless media to a few gateway nodes that have wired connections to the Internet. In this paper, we consider the Internet gateway placement (IGP) problem along with operational problems such as routing and wireless transmission capacity allocation. To eliminate wireless interference, we adopt the spatial reuse time division multiple access (TDMA) method, in which wireless transmissions are scheduled to occur at different time slots. We also employ destination-based single path routing for its ease of implementation. We present two mixed integer linear programming (MILP) formulations, both of which jointly determine the minimum number of gateway nodes needed to support forecasted demand, the locations of these gateway nodes, the routing trees, and the time slot allocations to wireless links. These formulations differ in the flow constraints. We also present a set of valid inequalities for the formulation with the multi-commodity flow constraints. In most cases, the solution to the IGP problem is not unique. Therefore, we also introduce a local search algorithm to select the most robust solution against any demand forecast errors. On example networks, we compare the proposed formulations with and without the valid inequalities in terms of the exact solution performances and the linear programming (LP) relaxations. We also demonstrate our local search algorithm to improve robustness against forecast errors on these example networks.

Optimal allocation of HVDC interconnections for exchange of energy and reserve capacity services

The increasing shares of stochastic renewables bring higher uncertainty in power system operation and underline the need for optimal utilization of flexibility. However, the European market structure that separates energy and reserve capacity trading is prone to inefficient utilization of flexible assets, such as the HVDC interconnections, since their capacity has to be ex-ante allocated between these services. Stochastic programming models that co-optimize day-ahead energy schedules with reserve procurement and dispatch, provide endogenously the optimal transmission allocation in terms of minimum expected system cost. However, this perfect temporal coordination of trading floors cannot be attained in practice under the existing market design. To this end, we propose a decision-support tool that enables an implicit temporal coupling of the different trading floors using as control parameters the inter-regional transmission capacity allocation between energy and reserves and the area reserve requirements. The proposed method is formulated as a stochastic bilevel program and cast as mixed-integer linear programming problem, which can be efficiently solved using a Benders decomposition approach that improves computational tractability. This model bears the anticipativity features of a transmission allocation model based on a pure stochastic programming formulation, while being compatible with the current market structure. Our analysis shows that the proposed mechanism reduces the expected system cost and thus can facilitate the large-scale integration of intermittent renewables.

The Impact of Implicit Electricity Market Coupling on the Slovenian-Austrian Border on the Efficiency of Cross-Border Transmission Capacity Allocation and Social Welfare in Slovenia

On the Slovenian-Austrian border cross-zonal capacities (CZCs) are currently allocated at explicit auctions, although in the future to comply with the European Target Electricity Model one can expect implicit auctions within market coupling to be implemented. Via a simulation, this paper aims to study the impact of implicit electricity market coupling on the Slovenian-Austrian border on the efficiency of CZC allocation and social welfare in Slovenia. The simulation results show that the use of implicit auctions would increase the efficiency of CZC allocation, reduce the price of electricity and increase the volume of trading in the Slovenian electricity exchange market. Further, implicit market coupling on the Slovenian-Austrian border would increase social welfare in Slovenia. DOI: 10.15458/85451.47

Cross-border reserve markets: network constraints in cross-border reserve procurement

Cross-border reserve markets—the procurement and activation of reserves in one control area to maintain system balance in another control area—can lead to increased cost-efficiency and reliability. However, network constraints impose limits on cross-border reserve coordination. Transmission capacity allocation in the reserve market is a complex problem, as it happens under uncertainty and interferes with transmission capacity allocation in energy markets. This paper studies network constraints in the reserve procurement phase, by means of a simulation model and scenario analysis. Three different approaches are proposed and evaluated based on a case study of the Central Western European electricity system. Towards this aim, a dedicated model is developed to simulate the day-ahead energy market, the day-ahead reserve procurement and the real-time reserve activation. In a case study of the Central Western European power system, we show that the best reserve market outcome—weighing cost-efficiency and system reliability—is obtained when reserve activation scenarios are considered in the procurement phase. Policy makers should design, in close cooperation with regulators and system operators, efficient and robust transmission capacity allocation procedures for cross-border reserve markets. This paper can help them to do so as it demonstrates the impact of transmission capacity allocation on cross-border reserve markets.

Exact and heuristic approaches based on noninterfering transmissions for joint gateway selection, time slot allocation, routing and power control for wireless mesh networks

Wireless mesh networks (WMNs) provide cost-effective alternatives for extending wireless communication over larger geographical areas. In this paper, given a WMN with its nodes and possible wireless links, we consider the problem of gateway node selection for connecting the network to the Internet along with operational problems such as routing, wireless transmission capacity allocation, and transmission power control for efficient use of wired and wireless resources. Under the assumption that each node of the WMN has a fixed traffic rate, our goal is to allocate capacities to the nodes in proportion to their traffic rates so as to maximize the minimum capacity-to-demand ratio, referred to as the service level. We adopt a time division multiple access (TDMA) scheme, in which a time frame on the same frequency channel is divided into several time slots and each node can transmit in one or more time slots. We propose two mixed integer linear programming formulations. The first formulation, which is based on individual transmissions in each time slot, is a straightforward extension of a previous formulation developed by the authors for a related problem under a different set of assumptions. The alternative formulation, on the other hand, is based on sets of noninterfering wireless transmissions. In contrast with the first formulation, the size of the alternative formulation is independent of the number of time slots in a frame. We identify simple necessary and sufficient conditions for simultaneous transmissions on different links of the network in the same time slot without any significant interference. Our characterization, as a byproduct, prescribes a power level for each of the transmitting nodes. Motivated by this characterization, we propose a simple scheme to enumerate all sets of noninterfering transmissions, which is used as an input for the alternative formulation. We also introduce a set of valid inequalities for both formulations. For large instances, we propose a three-stage heuristic approach. In the first stage, we solve a partial relaxation of our alternative optimization model and determine the gateway locations. This stage also provides an upper bound on the optimal service level. In the second stage, a routing tree is constructed for each gateway node computed in the first stage. Finally, in the third stage, the alternative optimization model is solved by fixing the resulting gateway locations and the routing trees from the previous two stages. For even larger networks, we propose a heuristic approach for solving the partial relaxation in the first stage using a neighborhood search on gateway locations. Our computational results demonstrate the promising performance of our exact and heuristic approaches and the valid inequalities

Linking the energy-only market and the energy-plus-capacity market

This article analyzes the implications of capacity markets and allocation mechanisms for cross-border trade and market welfare by applying an analytical model where two markets with different market designs, the energy-only market and the energy-plus-capacity market, are interconnected and operate under different transmission capacity allocation schemes. The findings suggest that having an energy-only market at one side of the border and an energy-plus-capacity market at the other side may impede cross-border trade and result in underusage or misusage of transmission in the case of an explicit allocation of transmission capacity. Implicit allocation or market coupling, in principle, would increase the efficiency of cross-border trade, but may result in distributional effects, involving for instance a free-riding effect.

Availability-aware service provisioning in SD-EON-based inter-datacenter networks

The tremendous transmission capacity and flexible spectrum allocation scheme make elastic optical networks (EONs) one of the most promising infrastructures for constructing the interconnection in datacenter (DC) networks. Meanwhile, as DC traffics exhibit highly dynamic and heterogeneous features, differentiated service provisioning schemes are desired. In this paper, we take the advantage of centralized network control and management provided by the software-defined elastic optical networks (SD-EONs) and investigate availability-aware service provisioning in SD-EON-based inter-datacenter (inter-DC) networks. We first describe the problem of availability-aware service provisioning in SD-EON-based inter-DC networks and present the theoretical analysis for service availability. Then, we propose an availability-aware service provisioning algorithm (ASP) that leverages different path protection schemes to satisfy different service availability requirements. A service downgrading (SD) strategy is also designed as a supplement of ASP to further improve its performance. Simulation results show that the proposed ASP-SD algorithm can effectively improve the spectrum efficiency without sacrificing availability.

Locational marginal pricing‐based allocation of transmission capacity in multiple electricity markets

In recent years, there has been an increasing interest in energy exchange among the electricity markets. This subject, especially in Europe, has been identified as a market coupling. The issue of congestion management in multiple electricity markets or market coupling has been controversial and has resulted in some disputed subjects. The locational marginal pricing-based allocation of transmission capacity for congestion management and clearing of multiple electricity markets, in which market participants can place their bids simultaneously in different markets across an interconnection, is proposed. In this framework, the markets dispatch energy and reserve, independently. A central coordinator entity, then, runs economically the allocation of transmission capacity among the electricity markets. Three methods for simultaneous clearing of energy and reserve in the framework are also proposed. The possibility of implementation of the proposed methods in multiple markets is discussed. The numerical results for a three-area 15-bus test system in a triple-market case are presented to demonstrate the effectiveness of the proposed approach as compared with other approaches.

Coordinated dispatch of regional transmission organizations: Theory and example

In this paper we consider the coordination of economic dispatch across multiple Regional Transmission Organizations (RTOs) to optimize interchange levels, including consideration of the coordination of “congestion relief” as practiced in the Eastern Interconnection of North America. The approach involves the formulation of a hierarchical optimization problem where the interchange and the allocation of shared transmission capacity are decision variables in the upper-level problem. We provide necessary conditions for achieving jointly optimal dispatch across multiple RTOs and develop a basic coordination algorithm from the necessary conditions. An example serves to illustrate the coordination.

Coordinating Cross-Border Congestion Management Through Auctions: An Experimental Approach to European Solutions

Competition among producers within an integrated electricity system is impeded by any limited transmission capacity there may be at its borders. Two alternative market mechanisms have recently been designed to organize the allocation of scarce transmission capacity at cross-border level: the 'implicit auction', already used in some countries, and the 'coordinated explicit auction', proposed by the European Transmission System Operators (ETSO) but not implemented yet. The main advantage of the explicit auction is that it allows each country to keep its own power exchange running. In the European institutional context, this is seen as a factor of success of a market reform, although the explicit auction (not coordinated) is known to be less efficient than the implicit mechanism. The addition of a coordination dimension in the explicit auction is intended to solve problems of international flows. We use an experimental methodology to identify and compare in a laboratory setting the efficiency properties of these two market mechanisms, given a market structure similar to the existing one in continental Europe, i.e. a competitive oligopoly. Our main result highlights the inefficiency of the coordinated explicit auction compared to the performance of the implicit auction, measured in terms of both energy prices and transmission capacity allocation. We suggest that the poor performance of the coordinated explicit auction in the laboratory is due to the level of individual expectations about both energy and transmission prices that the mechanism demands. One solution to resolve this problem when the mechanism is implemented in the field would be to design an additional and secondary market for 'used' transmission capacity.

Coordinating cross-border congestion management through auctions: An experimental approach to European solutions

Competition among producers within an integrated electricity system is impeded by any limited transmission capacity there may be at its borders. Two alternative market mechanisms have recently been designed to organize the allocation of scarce transmission capacity at cross-border level: (i) the “implicit auction”, already used in some countries, and (ii) the “coordinated explicit auction”, proposed by the European Transmission System Operators (ETSO) but not yet implemented. The main advantage of the explicit auction is that it allows each country to keep its own power exchange running. In the European institutional context, this is seen as a factor of success of a market reform, although the explicit auction (not coordinated) is known to be less efficient than the implicit mechanism. The addition of a coordination dimension in the explicit auction is intended to solve problems of international flows. We use the experimental methodology to identify and compare in a laboratory setting the efficiency properties of these two market mechanisms, given a market structure similar to the existing one in continental Europe, i.e. a competitive oligopoly. Our main result highlights the inefficiency of the coordinated explicit auction compared to the performance of the implicit auction, measured in terms of both energy prices and transmission capacity allocation. We suggest that the poor performance of the coordinated explicit auction in the laboratory is due to the level of individual expectations about both energy and transmission prices that the mechanism demands. One solution to resolve this problem when the mechanism is implemented in the field would be to design an additional and secondary market for “used” transmission capacity.

Market Based Analysis of Power System Interconnections

Market Based Analysis of Power System InterconnectionsAnalysis in this Article is focused on usage of transmission grid under liberalized market with implicit transmission capacity allocation method, e.g. Nordic market. Attention is paid on fundamental changes in transmission utilization and its economical effective operation. For interconnection and power flow analysis and losses calculation model of Nordic grid was developed and transmission losses calculation method was created. Given approach will improve economical efficiency of system operation in electricity market conditions.