Application of a coordinated auctioning method for the allocation of cross border transmission capacities in the European system

The in progress opening of the electricity markets in the European interconnected system is leading to a consistent increase of the cross border (CB) exchanges up to the risk of congestions that jeopardize the most convenient exploitation of the cheapest generation resources. Aimed to send right economic signals to the transmission network users by means of a fair and efficient allocation of the CB transmission capacity, methods for the solution of the problem based on market rules are required by recent statements of the European Commission. After a brief overview of the main market based methods, the authors focus their attention on the "coordinated auctioning" approach and simulate its application to the UCTE system (the largest interconnection in Europe). A transmission network model extended up to 4200 busses is employed in the developed optimization procedure where different hypotheses on the adoptable security criteria and on the characteristics of the capacity bids are examined. The economic results of the allocation scheme are discussed, presenting the distribution of costs and revenues to the countries involved in the auction