Technical-economical simulations of a deregulated electricity market: the setting of power flow limits in the interconnection lines

One of the key functions of any independent system operator is checking that the scheduled power flows do not exceed the operating limits of the transmission grid. If these limits are overcome zonal prices arise and this fact produces a major barrier to the free trade of energy. The operating limits of the transmission grid are generally fixed to ensure a given level of security in the power system. Nowadays the problem is simply solved by verifying that, after an interconnection line has gone out of service, the remaining lines are able to transport the power flowing in the faulty line (first contingency security criterion). In the present paper a different approach is proposed, based on probabilistic assumptions. The methodology developed under this approach is based on the consideration that the total costs for the customers (energy, system auxiliary services and undelivered energy) must be minimized. The methodology is applied to a case study where two zones linked by two interconnection lines are present.