Integrated zonal-exchange and nodal-flow clearing model in multi-zonal spot electricity markets

This paper presents a model for the solution of the flow-based model in multi-zonal European spot markets with zonal-based exchanges. The model involves a straightforward approach for solving inter-zonal exchanges and nodal injections that retain branch physical flow limits, notably mixing branch physical flows and inter-zonal exchanges in a single multi-clearing model. Its goal is to attain optimal supply, demand and market exchanges, endogenously bounded by grid physical constraints, e.g. branch physical limits. The model attains simultaneously (a) intuitive exchanges between interconnected bidding zones, (b) accurate computation of flows at the critical intra-zonal and inter-zonal branches, and (c) correct pricing at bidding zone level. The model is compared in terms of social welfare and cleared exchange volumes with the“intuitive patch” currently applied by Euphemia solver followed by a “tuning” model for the simulation of redispatching to avoid congestion in physical branches. The comparison proves the model's superiority in attaining overall optimal intuitive solutions avoiding redispatching costs caused by intrinsic inefficiencies in its design.