European electricity market integration under various network representations

The integration of the European electricity market constitutes a critical and contemporary issue, expected to take place within year 2015. In view of the forthcoming RES penetration, physical markets with unit-based offers-either power pools or Power Exchanges (PXs)-check the feasibility of the electricity market solution against their intra-zonal transmission capacity constraints. An iterative process is examined, with two variations, differentiating only in the way that the internal network of each physical market is represented. In each iteration of the proposed algorithm, intra-zonal power flows are calculated, possible violations of internal transmission limits are identified and additional constraints are incorporated in the centralized market splitting problem, in order to avoid the overloading of internal transmission lines. The attained results are compared to those of a centralized market-splitting problem, considering the full European network configuration. The above methods are compared in terms of (a) solution efficiency, (b) correct pricing and (c) computational efficiency.