Flow-Based Market Coupling Revised - Part I: Analyses of Small- and Large-Scale Systems

HEMF Working Paper No. 06/2019

37 Pages Posted: 21 Jun 2019

See all articles by Björn Felten

Björn Felten

University of Duisburg-Essen

Tim Felling

University of Duisburg-Essen

Paul Osinski

University of Duisburg-Essen

Christoph Weber

University of Duisburg-Essen

Date Written: June 11, 2019

Abstract

By interlinking power systems, significant welfare gains can be achieved. However, different approaches for coupling electricity markets exist. A recent development in this field is the implementation of flow-based market coupling (FBMC) in Central Western Europe (CWE). Indeed, FBMC has proven to be advantageous compared to the former situation in CWE Amprion et al. 2014 and to be operationally manageable under current market conditions. However, analyses of possible future adjustments of market areas ("bidding zones") have shown problems in assessing and even understanding FBMC Entso-E 2018. Therefore, Part I of this two-part paper contributes to resolving these problems. First, it presents key issues and effects of all essential FBMC elements. This is done drawing the feasible regions of the FBMC constraints – a method that is well-known from optimization theory. However, in the way it is applied to FBMC it is novel and offers significant insights. These insights are presented on the basis of a stylized yet fully transparent and reproducible example. Thereby, we improve the understanding of benefits and shortcomings of FBMC. Second, we introduce a large-scale model framework capable of assessing FBMC as implemented in CWE. This enables us to assess real-world power systems also when undergoing structural changes. This lays the foundation for the case study presented in Part II.

Keywords: Flow-based market coupling; Zonal pricing; Nodal pricing; Feasible regions; Flow-based domains; Electricity market modeling; Grid modeling

JEL Classification: C61, C80, D61, Q41, Q43, Q48

Suggested Citation

Felten, Björn and Felling, Tim and Osinski, Paul and Weber, Christoph, Flow-Based Market Coupling Revised - Part I: Analyses of Small- and Large-Scale Systems (June 11, 2019). HEMF Working Paper No. 06/2019 . Available at SSRN: https://ssrn.com/abstract=3404044 or http://dx.doi.org/10.2139/ssrn.3404044

Björn Felten

University of Duisburg-Essen ( email )

Universitätsstraße 2
Essen, 45141
Germany

HOME PAGE: http://www.ewl.wiwi.uni-due.de

Tim Felling

University of Duisburg-Essen ( email )

Universitätsstraße 2
Essen, 45141
Germany

HOME PAGE: http://www.ewl.wiwi.uni-due.de

Paul Osinski

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

Christoph Weber (Contact Author)

University of Duisburg-Essen ( email )

Universitätsstraße 2
Essen, 45141
Germany

HOME PAGE: http://www.ewl.wiwi.uni-due.de

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