Monte Carlo selection of the bilateral contracts in the Italian power Exchange

In the Italian electricity market, the bilateral contracts are granted a scheduling priority within the market clearing process: for this reason, in order to perform a detailed market simulation, it is necessary to focus the attention also on the selection of the plants involved in the bilateral transactions. In this paper, a Monte Carlo approach is followed, based on two weights related to both the production cost and the curtailment risk. The choice of the most suitable set of weights is performed by a comparison between a market simulation run with the contracts and one run without the contracts