European Market Couplings: Description, modelling and perspectives

The ldquoTrilateral Market Couplingrdquo (TLC) between France, Belgium and the Netherlands was set up in November 2006. It allows an optimal allocation of the cross-border capacities that are submitted by the Transmission System Operators through an implicit auctioning mechanism. The level of price convergence in this region has given incentives to extend this mechanism to Luxemburg and Germany in the short term in the framework of the so called ldquoOpen Market Couplingrdquo. However, can the present process that rules the TLC be used for a five-market system? This paper answers this question, relying on results obtained with two simulation models of the TLC and tackles the advantages and drawbacks of each model, in the perspective of their utilization for modeling the Open Market Coupling. Finally, advantages of a ldquoflow-basedrdquo market coupling versus a ldquocapacity-basedrdquo market coupling are discussed.