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

Endre Bjørndal (), Mette Bjørndal () and Hong Cai ()
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Endre Bjørndal: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Mette Bjørndal: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway, https://www.nhh.no/en/employees/faculty/mette-helene-bjorndal/
Hong Cai: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

No 2018/15, Discussion Papers from Norwegian School of Economics, Department of Business and Management Science

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 (search for similar items in EconPapers)
JEL-codes: Q00 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2018-10-24
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