An Integrated Intuitive Exchange- and Flow-Based Market Clearing Model

A novel integrated exchange-based and flow-based model is presented in this paper, which attains simultaneously (a) intuitive exchanges, (b) maximum flows at the critical branches (up to their physical limits denoted by their Remaining Available Margin), and (c) it is cleared at one-shot. The model practically represents two problems that are forced to equilibrate: the first problem aims at the maximization of supply/demand surplus subject to respective supply/demand limits; the second aims at the maximization of intuitive branch exchanges subject to respective boundaries of exchange volumes as imposed by physical flow limits. The solution results attain a simultaneously physically feasible and “commercially” rational solution. The model is formulated as a Mixed Complementarity Problem, comprising linear complementarity conditions of the associated quantity and price variables, thus leading to computationally efficient solutions even in large-scale day-ahead electricity markets. The model is compared in terms of social surplus and cleared bilateral exchanges with the “intuitive patch” currently applied in the Central-Western European region, proving its superiority in attaining optimal intuitive solutions.