A New Model to Simulate Local Market Power in a Multi-Area Electricity Market: Application to the European Case

Alberto Orgaz, Antonio Bello and Javier Reneses
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Alberto Orgaz: Institute for Research in Technology (IIT), ICAI School of Engineering, Comillas Pontifical University, 28015 Madrid, Spain
Antonio Bello: Institute for Research in Technology (IIT), ICAI School of Engineering, Comillas Pontifical University, 28015 Madrid, Spain
Javier Reneses: Institute for Research in Technology (IIT), ICAI School of Engineering, Comillas Pontifical University, 28015 Madrid, Spain

Energies, 2019, vol. 12, issue 11, 1-15

Abstract: The work presented in this article proposes an original method that models the medium-term market equilibrium under imperfect competition circumstances in multi-area electricity systems. It provides a system analysis considering multiple market splitting possibilities, where local market power may appear according to the status of the interconnections. As a result of new policies and regulations, power systems are increasingly integrating the existing electricity markets in unified frameworks. The integration of electricity markets poses highly challenging tasks due to the uncertainty that comes from the agents’ strategic behaviors which depend on multiple factors, for instance, the state of the interconnections. When it comes to modeling these effects, the purpose is to identify each strategy by using conjectured-price responses that depend on the different states of the system. Consequently, the problem becomes highly combinatorial, which heightens its size as well as its complexity. Therefore, the purpose of this work’s methodology is the reduction of the possible network configurations so as to ensure a computational tractability in the problem. In order to validate this methodology, it has been put to the test in a realistic and full-scale two-year operation planning model of the European electricity market that consists of a group of nine countries.

Keywords: conjectural variations; European internal electricity market; market equilibrium; multi-area system; optimization models (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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