The Integration of the European Electricity Market

Table of Contents

1 Introduction

1.1 Motivation and Relevance

1.2 Research Objective

1.3 Main Contribution

1.4 The Structure of Thesis

1.5 List of Publications

2 Literature Review

2.1 History of the Liberalization of Electricity Market in Europe

2.2 Relevant stakeholders of European Electricity Market

2.2.1 Regulators

2.2.2 Producers

2.2.3 Transmission System Operators

2.2.4 Power Exchanges

2.2.5 Auction Offices for Cross Border Capacity

2.3 Market Coupling Process

2.3.1 Regional Electricity Markets

2.3.2 Market Coupling Timeline

2.3.3 Congestion Management Allocation Methods

2.3.4 Cross-border Trade Energy in 2014

2.4 Market Integration: Benefits and Obstacles

2.4.1 The Benefits of Market Integration

2.4.2 The Obstacles of Market Integration

3 European Target Model and Relevant Projects

3.1 Introduction

3.2 Capacity Allocation and Congestion Management

3.2.1 The ATC model

3.2.2 The Flow-based model

3.3 Projects of Market Coupling in Europe

3.3.1 Harmonization of Long Term Allocation Rules Project

3.3.2 Price Coupling of Regions Project

3.3.3 Cross-Border Intra-Day Market Project

3.3.4 Cross Border Electricity Balancing Pilot Projects

3.4 Conclusion

4 The Coupling of Day-ahead Electricity Market

4.1 Introduction

4.2 Structure of Day-Ahead Electricity Market in Europe

4.2.1 Type of Orders

4.2.2 Non-Convexities in the Day-Ahead Electricity Market Model

4.2.3 Transmission Network

4.3 Study Case: Price Coupling of Regions Project Impact on Italian Electricity Market

4.3.1 Introduction

4.3.2 Italian Electricity Market and Coupling Process

4.3.3 Data Analyzes

4.3.4 Conclusions

4.4 Uniform Price for the European Day-Ahead Electricity Market

4.4.1 Literature Review

4.4.2 Motivations and contributions

4.4.3 European Day-Ahead Electricity Market Mathematic Model

4.4.4 Test and Results

4.4.5 Conclusion

4.5 Non-Uniform Price for the European Day-Ahead Electricity Market

4.5.1 The Issues of Uniform Price Model

4.5.2 Literature Review

4.5.3 Approach and Contributions

4.5.4 Mathematic Model

4.5.5 Case Study and Result

4.5.6 Conclusion

4.6 A thorough comparison among various approaches on the PUN Sub-Problem

4.6.1 Biography

4.6.2 Mathematic Model based on complementarity theory

4.6.3 Test and Results

4.6.4 Conclusion

4.7 Conclusion

5 The Coupling of Intra-Day Electricity Market

5.1 Introduction

5.2 State-of-the-art of Intra-Day Market in Europe

5.2.1 Market Design

5.2.2 Type of Orders

5.2.3 Capacity Allocation Management

5.3 The Hybrid Intra-Day Market Mechanism

5.3.1 Goal and Contributions of the Model

5.4 Mathematic Model

5.4.1 Optimization Problem

5.4.2 Data Processing Module

5.5 Hybrid Intra-Day Market Mechanism

5.6 Test and Result

5.6.1 Case Study

5.6.2 Result

5.7 Conclusion

6 Conclusions and Future Work

6.1 Conclusions

6.2 Future Work

Research Objectives and Themes

The primary research objective is to develop and implement advanced mathematical models to optimize the coupling of Day-Ahead Markets (DAM) and Intra-Day Markets (IDM) within the European electricity sector. The research focuses on minimizing computational time while ensuring that all market constraints are respected to facilitate efficient market integration and fairness for all participants, with a specific case study on the Italian electricity market.

• Mathematical optimization of European Day-Ahead and Intra-Day Market coupling.
• Evaluation of the Price Coupling of Regions (PCR) impact on the Italian market.
• Development of unified models addressing non-convexities, such as Minimum Income Conditions (MIC) and block orders.
• Enhancing computational efficiency in market clearing algorithms compared to current methods like EUPHEMIA.
• Analysis and validation of market clearing and congestion management in real-world scenarios.

Excerpt from the Book

Summary of Chapters

1 Introduction: Provides the context of European market liberalization, states the research objectives regarding advanced mathematical models for market coupling, and outlines the thesis structure.

2 Literature Review: Details the historical path of European market liberalization, key stakeholders (TSOs, PXs, Regulators), and the progression of market coupling mechanisms.

3 European Target Model and Relevant Projects: Examines the European Union's target model for market integration, specifically focusing on capacity allocation and congestion management via ATC and Flow-Based models.

4 The Coupling of Day-ahead Electricity Market: Presents the primary mathematical models for DAM coupling, including the Uniform Price Model and the Non-Uniform Price Model, and evaluates their performance.

5 The Coupling of Intra-Day Electricity Market: Discusses the structure of Intra-Day Markets in Europe, proposes the CTMA mathematical model, and simulates hybrid integration designs.

6 Conclusions and Future Work: Summarizes the key findings of the research and identifies potential future research trajectories for the European electricity market integration.

Keywords

Electricity Market, Market Coupling, Day-Ahead Market, Intra-Day Market, Price Coupling of Regions (PCR), Social Welfare Maximization, Congestion Management, EUPHEMIA, Mixed-Integer Quadratic Constraint Programming (MIQCP), Non-convexity, Transmission System Operators (TSOs), Power Exchanges (PXs), European Internal Energy Market (IEM), Renewable Energy Sources (RES), Optimization Models.

Frequently Asked Questions

What is the primary scope of this research?

The research focuses on the mathematical modeling and optimization of the European electricity market coupling, specifically for both Day-Ahead and Intra-Day timeframes, to facilitate a harmonized Internal Energy Market (IEM).

What are the core thematic areas covered?

The book addresses market design liberalization, stakeholders' roles, congestion management methodologies (ATC vs. Flow-Based), and the implementation of advanced optimization algorithms for market clearing.

What is the central research goal?

The goal is to propose advanced mathematical models for market coupling that enhance performance and minimize computational time while effectively handling complex market rules and non-convexities.

Which scientific methods are utilized?

The research utilizes Mixed-Integer Quadratic Constraint Programming (MIQCP), Mixed-Integer Linear Programming (MILP), and Complementarity Theory to formulate and solve market clearing problems.

What topics are discussed in the main chapters?

The chapters cover literature reviews on market history, the European target model, the mathematical formulation for Day-Ahead and Intra-Day coupling, and detailed case studies verifying the models' performance.

Which keywords define this work?

Key terms include Market Coupling, Day-Ahead Market, Intra-Day Market, Price Coupling of Regions, Congestion Management, Social Welfare Maximization, and MIQCP optimization.

How does the proposed "Uniform Price Model" differ from existing approaches?

The model improves upon existing methods by providing a unified, more efficient mathematical framework that mitigates non-convexities caused by block and MIC orders while reducing computation time.

What is the practical application of the Italian case study?

The study provides a detailed, real-world evaluation of how the Price Coupling of Regions (PCR) project specifically impacted Italian market liquidity, congestion, and electricity price convergence after 2015.