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

Significance 

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.

About the author

David Schönheit, born July 31, 1990, obtained an MSc in Industrial Engineering with a specialization in Energy and Resource Management from TU Berlin in 2017. From 2018 until 2021 he was a research associate at the Chair of Energy Economics of TU Dresden, where he received his PhD degree. D. Schönheit’s research included the modeling of energy systems, modeling and analyzing the set-up of flow-based market coupling in Europe and the influence of renewable energy on power markets. Since April 2021, he is an advisor at a German transmission system operator (50Hertz Transmission).

About the author

Kenneth Bruninx, born September 6, 1988, obtained the MSc in Energy Engineering in 2011, the MSc in Management in 2015 and the PhD degree in Mechanical Engineering in 2016, all from KU Leuven. From 2016 until 2022, he was a postdoctoral researcher at KU Leuven and EnergyVille, supported by the Flemish Institute for Technological Research (VITO) and the Research Foundation Flanders. As of June 2022, he is a assistant professor at TU Delft. K. Bruninx’s research focusses on the modeling of energy systems and their link to energy policies and markets on the national and European level. He is a member of CIGRE, IEEE, IAEE and INFORMS.

About the author

Michiel Kenis, born November 5, 1996, obtained the MSc in Energy Engineering in 2019 and the MSc in Policy Economics in 2022, both from KU Leuven. Since 2019, he is a doctoral researcher at the Energy Systems Integration & Modeling group of KU Leuven and EnergyVille, supported by the Flemish Institute for Technological Research (VITO). His research includes the development of models and policy support toward the integration of renewable energy in electricity markets with a focus on cross-border trade. He is a member of IAEE.

About the author

Dominik Möst is full professor of energy economics at the Technische Universität Dresden since 2010. He was Vice Dean of the Faculty of Business and Economics, TU Dresden from 2013 to 2018. Before being in Dresden, he headed the research group „Energy system analysis and environment“ from 2004 to 2010 at the Institute for Industrial Production at the Karlsruhe Institute of Technology (KIT) – formerly Universität Karlsruhe (TH). Additional Mr. Möst was heading the Young Investigator Group (YIG) „New methods for energy market modelling“ at the KIT, which was granted within the Excellence program of the KIT. Among many third-party funded projects, he coordinated the Horizon 2020 LCE21 project “REFLEX – Analysis of the European energy system under the aspects of flexibility and technological progress” with a project volume of 3 million Euro.

He studied Industrial Engineering and Business administration at the Universität Karlsruhe (TH) and at the ENSGI-INPG Grenoble (Ecole nationale supérieure de Genie Industriel, France), holds a Dr. degree in economics from the Universität Karlsruhe (TH) and habilitated at the Karlsruher Institute of Technology with the topic “Energy economics and energy system analysis – Methods for decision support and its application in energy markets”. His research focuses on analyzing the development of European electricity and gas markets, the integration of renewable sources as well as energy and resource efficiency. His objective is to anticipate and to study relevant issues in energy economics and to discuss the gained knowledge with representatives from policy and industry as well as with students in the context of our teaching.

Reference

Schönheit, D., Bruninx, K., Kenis, M., & Möst, D. (2022). Improved selection of critical network elements for flow-based market coupling based on congestion patternsApplied Energy, 306, 118028.

Go To Applied Energy

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