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Integration of day-ahead market and redispatch to increase cross-border exchanges in the European electricity market

Author

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  • Poplavskaya, Ksenia
  • Totschnig, Gerhard
  • Leimgruber, Fabian
  • Doorman, Gerard
  • Etienne, Gilles
  • de Vries, Laurens

Abstract

The zonal electricity market design in the Central Western European electricity market relies on redispatching generation units after market closure to manage congestion within bidding zones, while congestion between the zones is handled using flow-based market coupling. The combination of internal congestion in the meshed European network with a growing share of renewables increases the frequency and magnitude of congestion events and limits cross-border trade. The growing costs of redispatching and the divergence between grid physics and zonal markets lead to welfare losses. This paper is the first to propose an approach to improve the combined efficiency of flow-based market coupling and redispatching. We develop a novel methodology for congestion management in a zonal market with flow-based market coupling in order to increase cross-border exchanges by integrating preventive redispatch into the day-ahead market. In this approach, a set of integrated redispatch units is selected based on their high potential to reduce congestion and, as a result, free up grid capacity for cross-border exchange. We use three multi-step optimization models to demonstrate the benefits of the enhanced zonal market with integrated redispatch by comparing it to the nodal market model and a zonal market model with flow-based market coupling. The case study demonstrates the potential of the proposed methodology to significantly increase cross-border capacity and reduce the need for costly ex post redispatch. The approach is shown to be a feasible option for improving European market integration and thereby to achieve overall welfare gains.

Suggested Citation

  • Poplavskaya, Ksenia & Totschnig, Gerhard & Leimgruber, Fabian & Doorman, Gerard & Etienne, Gilles & de Vries, Laurens, 2020. "Integration of day-ahead market and redispatch to increase cross-border exchanges in the European electricity market," Applied Energy, Elsevier, vol. 278(C).
    • Handle: RePEc:eee:appene:v:278:y:2020:i:c:s030626192031165x
    DOI: 10.1016/j.apenergy.2020.115669
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    References listed on IDEAS

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    4. Rafael Finck, 2021. "Impact of Flow Based Market Coupling on the European Electricity Markets," Sustainability Nexus Forum, Springer, vol. 29(2), pages 173-186, June.
    5. Xu, Fangyuan & Zhu, Weidong & Wang, Yi Fei & Lai, Chun Sing & Yuan, Haoliang & Zhao, Yujia & Guo, Siming & Fu, Zhengxin, 2022. "A new deregulated demand response scheme for load over-shifting city in regulated power market," Applied Energy, Elsevier, vol. 311(C).
    6. Bucksteeg, Michael & Voswinkel, Simon & Blumberg, Gerald, 2023. "Improving flow-based market coupling by integrating redispatch potential - Evidence from a large-scale model," EconStor Preprints 270878, ZBW - Leibniz Information Centre for Economics.
    7. Backer, Martijn & Keles, Dogan & Kraft, Emil, 2023. "The economic impacts of integrating European balancing markets: The case of the newly installed aFRR energy market-coupling platform PICASSO," Energy Economics, Elsevier, vol. 128(C).
    8. Davi-Arderius, Daniel & Jamasb, Tooraj & Rosellon, Juan, 2024. "Renewable Integration and Power System Operation: The Role of Market Conditions," Working Papers 3-2024, Copenhagen Business School, Department of Economics.
    9. Schönheit, David & Bruninx, Kenneth & Kenis, Michiel & Möst, Dominik, 2022. "Improved selection of critical network elements for flow-based market coupling based on congestion patterns," Applied Energy, Elsevier, vol. 306(PA).
    10. Daniel Davi-Arderius & Tooraj Jamasb & Juan Rosellon, 2024. "Renewable integration: the role of market conditions," Working Papers EPRG2403, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    11. Štefan Bojnec & Alan Križaj, 2021. "Electricity Markets during the Liberalization: The Case of a European Union Country," Energies, MDPI, vol. 14(14), pages 1-21, July.
    12. Ruhang, Xu & Jia, Jia, 2023. "Towards reliability competition: Non-cooperative market mechanism under high variable renewable energy penetration," Applied Energy, Elsevier, vol. 331(C).
    13. Schönheit, David & Bruninx, Kenneth & Kenis, Michiel & Möst, Dominik, 2021. "Improved selection of critical network elements for flow-based market coupling based on congestion patterns," EconStor Preprints 233467, ZBW - Leibniz Information Centre for Economics.
    14. Samuli Honkapuro & Jasmin Jaanto & Salla Annala, 2023. "A Systematic Review of European Electricity Market Design Options," Energies, MDPI, vol. 16(9), pages 1-26, April.
    15. Bucksteeg, Michael & Voswinkel, Simon & Blumberg, Gerald, 2024. "Improving flow-based market coupling by integrating redispatch potential―Evidence from a large-scale model," Energy Policy, Elsevier, vol. 188(C).
    16. Cao, K.H. & Qi, H.S. & Tsai, C.H. & Woo, C.K. & Zarnikau, J., 2021. "Energy trading efficiency in the US Midcontinent electricity markets," Applied Energy, Elsevier, vol. 302(C).
    17. Rebeca Ramirez Acosta & Chathura Wanigasekara & Emilie Frost & Tobias Brandt & Sebastian Lehnhoff & Christof Büskens, 2023. "Integration of Intelligent Neighbourhood Grids to the German Distribution Grid: A Perspective," Energies, MDPI, vol. 16(11), pages 1-16, May.
    18. Li, Xiaozhu & Wang, Weiqing & Wang, Haiyun, 2021. "Hybrid time-scale energy optimal scheduling strategy for integrated energy system with bilateral interaction with supply and demand," Applied Energy, Elsevier, vol. 285(C).
    19. Girod, Marie & Donnot, Benjamin & Dussartre, Virginie & Terrier, Viktor & Bourmaud, Jean-Yves & Perez, Yannick, 2024. "Bid filtering for congestion management in European balancing markets – A reinforcement learning approach," Applied Energy, Elsevier, vol. 361(C).
    20. Wu, Zhaoyuan & Zhou, Ming & Zhang, Zhi & Zhao, Huiru & Wang, Jianxiao & Xu, Jiayu & Li, Gengyin, 2022. "An incentive profit-sharing mechanism for welfare transfer in balancing market integration," Renewable and Sustainable Energy Reviews, Elsevier, vol. 168(C).
    21. Schönheit, David & Dierstein, Constantin & Möst, Dominik, 2021. "Do minimum trading capacities for the cross-zonal exchange of electricity lead to welfare losses?," Energy Policy, Elsevier, vol. 149(C).

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