The Flow-Based Market Coupling Model and the Bidding Zone Configuration

26 Pages Posted: 25 Oct 2018

See all articles by Endre Bjorndal

Endre Bjorndal

Norwegian School of Economics (NHH) - Department of Business and Management Science

Mette Helene Bjorndal

Norwegian School of Economics (NHH) - Department of Business and Management Science

Hong Cai

Norwegian School of Economics (NHH) - Department of Business and Management Science

Date Written: October 24, 2018

Abstract

In May 2015, the Flow-Based Market Coupling (FBMC) model replaced the Available Transfer Capacity (ATC) model in Central Western Europe to determine the power transfer among bidding zones in the day-ahead market. It might be easier to change the bidding zone configuration in the FBMC model than in the ATC model as the FBMC model does not need to determine the maximum trading volume between two bidding zones. In our study, we run a simulation in the IEEE RTS 24-bus test system and examine how the bidding zone configurations affect the performance of both the FBMC and ATC models. We show that by improving the zone configuration, the FBMC model outperform the ATC in terms of reducing the re-dispatching cost only when the systems operators have a higher level of cooperation in the real-time market. Our results also indicate that better cooperation among the system operators would help to reduce the need for load shedding.

Keywords: OR in Energy, European power market, Flow-based model, ATC model, Day-ahead market

JEL Classification: Q00

Suggested Citation

Bjorndal, Endre and Bjorndal, Mette Helene and Cai, Hong, The Flow-Based Market Coupling Model and the Bidding Zone Configuration (October 24, 2018). NHH Dept. of Business and Management Science Discussion Paper No. 2018/15. Available at SSRN: https://ssrn.com/abstract=3272190 or http://dx.doi.org/10.2139/ssrn.3272190

Endre Bjorndal

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Mette Helene Bjorndal

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

Hong Cai (Contact Author)

Norwegian School of Economics (NHH) - Department of Business and Management Science ( email )

Helleveien 30
Bergen, NO-5045
Norway

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