Introducing advanced hybrid coupling: Non-discriminatory coalescence of flow-based and net transfer capacity calculation regions

TL;DR

This paper presents advanced hybrid coupling, a novel method that improves electricity market efficiency by enabling non-discriminatory coalescence of flow-based and net transfer capacity regions, leading to welfare gains.

Contribution

It introduces advanced hybrid coupling with virtual bidding zones, allowing better modeling of border impacts and trade prioritization in flow-based market coupling.

Findings

Welfare gains observed in case study.

Reduced congestion management costs.

Enhanced modeling of border impacts.

Abstract

Flow-based market coupling is substantially altering the computation of cross-zonal capacities for the trade of electricity in the vast majority of European markets. The main benefit of the flow-based method is improved accuracy by better representing the impact of cross-zonal trade on the power flows in transmission grids. Some borders, adjacent to flow-based capacity regions, are represented through net transfer capacities during market coupling. Under the current standard hybrid coupling, the utilization of grid elements in the flow-based regions due to the predicted trade across such borders is not available for trades between flow-based zones. The flow-based representation is not limited to the given capacity calculation region, but can be extended to also model the impact of trade with other regions. This so-called advanced hybrid coupling replaces the priority inherently given to trade across net transfer capacity-coupled borders by introducing virtual bidding zones. These map the effect of non-flow-based borders on line capacities in the flow-based regions, enabling the market coupling optimization to prioritize trade between flow-based bidding zones and trade across non-flow-based borders. This paper explains the mechanism of advanced hybrid coupling and how it is modeled mathematically. Based on a test network, a case study shows to what extent and why advanced hybrid coupling leads to welfare gains during market coupling and lower congestion management costs in the flow-based region.