Day-ahead and real-time operational signals for the European electricity market

This paper gives a comparison between zonal and nodal designs on the topic of Real-time and Day-ahead operational signals within and between different control areas. These designs are analyzed comparing public data and actual practices in use among different TSOs in comparable interconnected zones in Europe end the US, concluding that the zonal design is better suited for the European context. Concerning the Day-ahead signal, in a zonal design, market coupling (eventually with flow-based) allows an optimized use of interconnection capacity between control areas and the use of specific operating practices inside each control area. In nodal designs, control areas match market zones, but very poor results are observed at their interconnection, with inconsistency between price differentials and flows. Furthermore, the nodal design has some drawbacks concerning the optimization of maintenance periods and the leveling of operating procedures. A comparison of Day-ahead congestion revenues in the chosen areas shows that revenues were much greater in the US (1 798 M$ vs. 255 M€ in 2010). These values may reveal the different degree of development of the grid and may justify the choice of a nodal approach in the US. Inside a control area the Real-time signal is always nodal when needed, even in zonal designs; among different control areas the nature of the signal depends on the coordination level among TSOs. Topological remedial actions at almost no-cost seem easier to perform in a zonal design.