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Cross-Border Electricity Trading in Southeast Europe Towards an Internal European Market

Despoina I. Makrygiorgou (), Nikos Andriopoulos (), Ioannis Georgantas (), Christos Dikaiakos () and George P. Papaioannou ()
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Despoina I. Makrygiorgou: Research, Technology & Development Department, Independent Power Transmission Operator (IPTO) S.A., 89 Dyrrachiou & Kifisou Str. Gr, 10443 Athens, Greece
Nikos Andriopoulos: Research, Technology & Development Department, Independent Power Transmission Operator (IPTO) S.A., 89 Dyrrachiou & Kifisou Str. Gr, 10443 Athens, Greece
Ioannis Georgantas: Research, Technology & Development Department, Independent Power Transmission Operator (IPTO) S.A., 89 Dyrrachiou & Kifisou Str. Gr, 10443 Athens, Greece
Christos Dikaiakos: Research, Technology & Development Department, Independent Power Transmission Operator (IPTO) S.A., 89 Dyrrachiou & Kifisou Str. Gr, 10443 Athens, Greece
George P. Papaioannou: Research, Technology & Development Department, Independent Power Transmission Operator (IPTO) S.A., 89 Dyrrachiou & Kifisou Str. Gr, 10443 Athens, Greece

Energies, 2020, vol. 13, issue 24, 1-18

Abstract: The European Commission’s Target Model’s main objective is to integrate European electricity markets, leading to a single internal energy market and guaranteeing the instantaneous balance between electricity generation and demand. According to the target model for electricity trading, proposed by the European Network Transmission System Operators for Electricity (ENTSO-E), within each zone, electricity can be traded freely without taking into consideration network limitations. In contrast, for cross-border trading, the exchanges with other market areas are taken into account. Cross-border trade poses a further burden on the interconnection lines, resulting in increasing network congestion, which in turn restricts electricity trading. Thus, calculating the available capacity for trade has a significant ramification on the market. Today, the Available Transfer Capacity (ATC) mechanism dominates cross-border trading, but this methodology may be replaced by the Flow-Based (FB) approach across Europe. This paper investigates both approaches regarding the cross-border congestion management under the market coupling procedure. In our case study, the Southeast Europe (SEE) region is taken into consideration; it consists of both the FB and ATC approach in a five country (Greece, North Macedonia, Bulgaria, Serbia, and Romania) scenario. The purpose of our tests is to perform, compare, and evaluate the effectiveness of each method for the SEE region, while the main findings are the maximization of social welfare, better cross-border trading opportunities, and price convergence via the FB method.

Keywords: cross-border trading; ATC-NTC method; flow-based approach; market coupling; congestion management; SEE region (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: 2020
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