Improving flow-based market coupling by integrating redispatch potential―Evidence from a large-scale model
Michael Bucksteeg,
Simon Voswinkel and
Gerald Blumberg
Energy Policy, 2024, vol. 188, issue C
Abstract:
In European power markets, recent regulatory changes impose minimum trading capacities to increase cross-border trade. However, the sweeping definition of minimum margins neglects underlying physical grid constraints, resulting in higher redispatch volumes and costs. This raises questions about the efficiency and welfare effects of minimum trading capacities and whether alternative approaches exist for increasing cross-border trade. Against this background, this contribution studies the impact of integrating redispatch potential into flow-based market coupling (FBMC). Accordingly, cross-zonal capacity is not raised to a regulatory-specified minimum level but is increased whenever it is efficient, i.e., the net welfare effect is positive. To this end, a multi-stage model covering capacity calculation, market coupling, and redispatch stages is developed, and a large-scale numerical analysis of Central Europe is performed. The results confirm that minimum margins increase cross-border trade by roughly 20 TWh. However, this comes at a high cost due to additional redispatch needs, which reduce overall welfare by more than 100 M€ annually. Integrating redispatch potentials in the market-clearing stage leads to a more efficient increase in cross-border capacities and elevates welfare by up to 215 M€ per year. Finally, the analysis derives policy recommendations for introducing the redispatch potential approach.
Keywords: Flow-based market coupling; European electricity market; Cross-border trade; Congestion management; Redispatch (search for similar items in EconPapers)
JEL-codes: Q4 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421524001137
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:188:y:2024:i:c:s0301421524001137
DOI: 10.1016/j.enpol.2024.114093
Access Statistics for this article
Energy Policy is currently edited by N. France
More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().