Impact of Inter- and Intra-Regional Coordination in Markets With a Large Renewable Component

The establishment of the single European day-ahead market has accomplished a crucial step towards the spatial integration of the European power system. However, this new arrangement does not consider any intra-regional coordination of day-ahead and balancing markets and thus may become counterproductive or inefficient under uncertain supply, e.g., from weather-driven renewable power generation. In the absence of a specific target model for the common balancing market in Europe, we introduce a framework to compare different coordination schemes and market organizations. The proposed models are formulated as stochastic equilibrium problems and compared against an optimal market setup. The simulation results reveal significant efficiency loss in case of partial coordination and diversity of market structure among regional power systems.