The devil is in the detail – Improved selection of critical network elements for flow-based market coupling based on congestion patterns

The European setup is mainly based on zonal markets, which has resulted in numerous challenges. Intra-zonal congestions, for instance, have limited cross-border trade among European nations. Generally, zonal market-clearing has escalated the need for remedial actions based on congestion management strategies, such as curtailment and redispatch. However, with greater curtailment and redispatch volumes reported for the past years, achieving welfare-enhancing cross-zonal trade and grid-compatible market outcomes while at the same time respecting the existing intra- and cross-zonal grid limitations have recently become more challenging for most European countries.

Flow-based market coupling (FBMC) was introduced to provide the necessary cross-zonal trade capacities by incorporating intra- and cross-zonal grid elements within the limitation of the zonal pricing. It requires monitoring the physical limitations and flows of the most critical network elements (CNEs) affected by the cross-zonal trade. The better FBMC captures nodal information and grid utilization, the fewer downsides of the zonal market setup, and the benefits of zonal markets with a high market liquidity could prevail. This is difficult because FBMC highly depends on various predictive parameters like generation shift keys (GSKs) and congestion forecasts to determine the nodal information to be included in zonal market coupling. As a result, the congestion signals often used in the market are imperfect, leading to additional costs compared to a nodal pricing solution. However, FBMC improves the quality of congestion signals compared to other capacity calculation methods.

Information derived from hypothetical market zone re-configuration has been identified as a promising approach for selecting CNEs and finding congestion patterns. This is based on the fact that zonal market models are less constrained than nodal pricing models, which also illustrates the possibility of representing the nodal pricing using a zonal market. Although market zone re-configuration has numerous economic benefits, it depends on national and international politics and regulations. Despite the commendable research in this area, more evidence is still needed to support the use of market re-configuration for the efficient selection of CNEs.

Herein, Dr. David Schönheit, Dr. Kenneth Bruninx, PhD candidate Michiel Kenis and Professor Dominik Möst (D. Schönheit and D. Möst from the Technische Universität Dresden and K. Bruninx and M. Kenis from Katholieke Universiteit Leuven) investigated using hypothetically re-configured market zones to improve the selection of CNEs and reduce costs without necessarily having to change the marketing zoning. Specifically, an FBMC optimization model based on a 3-zone test network was used to identify congestion patterns for improving the network element selection without having to actually realize the re-configuration. The work is currently published in the journal, Applied Energy.

The research team reported that about 90% of the total cost reductions in re-configured market zones could be maintained when the CNEs derived from the re-configured markets are incorporated into the original 3-zone setting. Zone-to-zone power transfer distribution factors (PTDFs) values for regular market zone settings depend on the chosen GSKs. This shows that the CNE selection could have major flaws if the chosen GSK is incorrect or the underlying assumptions are weak.

Nevertheless, CNEs selection based on the re-configured market zones benefits from incorporating all lines crossing the borders during the setting of new market zones. The authors found strong evidence that the congestion-based process is beneficial in reducing the overall costs and the need for congestion management. This can be achieved by either using more optimal market zones or clustered nodes with similar prices, which is different from the currently used process. Furthermore, the re-configuration process could help incorporate the neglected price information.

In summary, the authors explored the improvement of CNE selection for FBMC based on congestion patterns. Although the presented analysis uses test networks and makes simplifying assumptions, it provides valuable insights regarding CNE selection process. The results suggested that an efficient CNE selection process should be primarily based on expected congestion patterns rather than static criteria. In a statement to Advances in Engineering, Professor Dominik Möst noted that the new approach addresses the limitations of the currently used static and assumption-based selection process and could facilitate efficient selection of CNEs in European grid operators.