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Electric Power Systems Research

Simulation and Evaluation of Zonal Electricity Market Designs

Scientific Article in English
Sarfati, Mahir and Pär Holmberg (2020). “Simulation and Evaluation of Zonal Electricity Market Designs”. Electric Power Systems Research 185, 106372.

Mahir Sarfati, Pär Holmberg

Zonal pricing with countertrading (a market-based redispatch) gives arbitrage opportunities to the power producers located in the export-constrained nodes. They can increase their profit by increasing the output in the day-ahead market and decrease it in the real-time market (the inc-dec game). For a six-node and a 24-node system, we numerically show that this leads to large inefficiencies in a standard zonal market. We also show how the inefficiencies can be significantly mitigated for these two examples by changing the design of the real-time market. We consider a two-stage game with oligopoly producers, wind-power shocks and real-time shocks. The game is formulated as a two-stage stochastic Equilibrium Problem with Equilibrium Constraints (EPEC), which we recast into a two-stage stochastic Mixed-Integer Linear Constraints (MILC).

Pär Holmberg

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