Impact assessment of a minimum threshold on cross-zonal capacity in a flow-based market

Abstract

The current organization of the internal electricity market in Europe relies on a zonal market system: the European power system is divided in bidding zones, electricity trades within a bidding zone can occur in an unconstrained manner, while electricity trades between bidding zones are limited by cross-zonal capacities. Two approaches can be used to calculate and allocate cross-zonal capacity: the coordinated Net Transmission Capacity (NTC) approach or the flow-based approach. In Central Western Europe, the flow-based approach is implemented for the day-ahead market since 2015. To avoid undue discrimination between internal and crossborder power exchanges, a minimum threshold of 70% on the cross-zonal capacity available for trade will be enforced in a near future. Such a threshold could significantly impact the socio-economic welfare and its distribution between the various actors. However, no assessment of the impacts of such a threshold has been performed so far, in particular because no convincing approach exists to perform such an assessment (e.g. security constraints and redispatch neglected). This paper develops such an approach and demonstrates its applicability on a case study, in order to assess the impact of a minimum threshold on cross-zonal capacity in a flow-based market.

Impact of Flow Based Market Coupling on the European Electricity Markets

“…The approach is evaluated on a two zone, 6 node system Schönheit et al (2020) Present an open-access model including a test network for experiments with the FB methodology Felten et al (2021) Compare FBMC to a nodal market clearing in a stylized single hour, 4-node system. Conclude that the closer the approximation of the base case is, the lower the welfare losses by FBMC are, compared to nodal pricing Henneaux et al (2021) Present a FBMC framework for a 3 area, 96-bus system. In this setup the impact of minimum threshold for crosszonal capacities (minRAM) are investigated.…”

“…The first group incorporates mainly conceptual work regarding FBMC (Kurzidem (2010), Mekonnen and Belmans (2012), Marien et al (2013), Schavemaker and Beune (2013), Sores et al (2013), Hagspiel et al (2014), Lang et al (2020), Poplavskaya et al ( 2020)) and fundamental research of parameter choice like base case calculation (Byers and Hug (2020), Felten et al (2021), minimum capacities (Henneaux et al (2021)) or Flow Reliability Margin (Weinhold (2021)) in the FBMC methodology. The research is mainly performed on stylized systems or with reduced spatial or temporal resolution, but provides important insights on what to keep in mind when applying FBMC to real life scenarios.…”

Supervised learning-assisted modeling of flow-based domains in European resource adequacy assessments

“…Reference [6] discusses how a FB domain is constructed considering the network model, input data, and parameter settings. The impacts of the internal (discretionary) parameters of the FB model on the FBMC outcomes are investigated in [7][8][9][10], which demonstrate how an optimal setting of such parameters can maximize the performance of the FBMC. In addition, a new method is proposed in [11] that aims to enhance the overall efficiency of the FBMC and its eventual remedial actions.…”

“…To integrate the cross-border exchange capacities defined by the FB domains into the probabilistic adequacy assessments, the main challenge consists in finding the FB domain that correctly represents the potentially binding grid constraints for the system conditions at hand. Indeed, the hourly FB domains depend on the network operating points as well as the internal (discretionary) parameters of the FB model (e.g., generation shift keys for nodal to zonal conversion [7], the minimum threshold for selection of the critical network elements [8], and the minimum branch capacities reserved for the power exchanges [9][10]). A direct model-based calculation of hourly FB domains first necessitates adopting assumptions on the abovementioned parameters that are partly known to a Transmission System Operator (TSO) as the FB calculation entails a sequential process that relies on the exchange of data among the involved TSOs.…”

Enhanced integration of flow-based market coupling in short-term adequacy assessment

“…Indeed, the FB domains depend on factors such as network operating points and exogenous conditions (e.g., meteorological circumstances affecting the load demands and renewable generations) [16], which cannot be precisely known over studied horizon of the adequacy assessment. In addition, the internal parameters of FBMC such as the generation shift keys and the considered minimum threshold can have high impacts on FB domains and the market outcomes as studied in [17], [18], [19], [20]. In such a context, computation of hourly FB domain for each scenario of risk-based adequacy study, firstly, requires adopting assumptions on those parameters (that may not correctly match with the reality), secondly, it noticeably increases the computational complexity of the adequacy assessment.…”