Methods for the determination of flow-based capacity parameters: description, evaluation and improvements


Flow-based market coupling, the cheapest path to security of supply

Currently a lot of European countries struggle with the Security of Supply of electricity. Belgium is one of the leading problem cases. In order to achieve long-term security of supply, Europe puts its stake on increasing the interconnection capacity between member states (1). This option is expensive but can be viable. For short-term problems, like shortages in Belgium, the investment plan offers no solution. In research a lot attention is given to complex and challenging solutions like demand side management. But maybe to solution is closer and easier than we expect. Allowing more trade by exploiting the current grid to its full potential could significantly increase the security of supply. It would certainly solve the Belgium shortages. The current exploitation of the market coupling is too conservative. In this context the flow-based market coupling makes its appearance.

On 20 May 2015, the flow-based market coupling (FBMC) is expected to go live in the Central West European (CWE) market zone (5). This new method for coupling the electricity markets should accurately take the network constraints into account and subsequently unlock the full potential of interconnection capacities. However, the current FBMC-implementation proposal still leaves some room for improvements.

The principle of a market coupling
Since the liberalization of the European electricity markets, the EU strives to achieve a secure and economically efficient electricity system by allowing competition between suppliers on electricity markets. Coupling the electricity markets of different Member States improves the economic efficiency (see figure 1) and enhances the security of supply.

When trade is allowed between different zones it is important to take the network limitations into account. The maximum capacities of interconnection lines induce limitations on the allowable trade. The determination of these limits for the permissible trade capacity is not straightforward. On the electricity market, trades are defined as exchanges between two zones via one commercial path. In reality trade possibilities for zone A to zone B are depending on the trade for B to C as physical flows travel in parallel paths. This is represented in figure 2 for a commercial trade of 90 MW between two zones.

In the currently used Available Transfer Capacity (ATC) based market coupling this problem is solved by making a prediction of the expected trades and their corresponding parallel flows. Considering the parallel flows as already in place, the value for the remaining available exchange capacity is determined and this capacity is given to the electricity market. If the eventual market outcome differs from the prediction, which is highly likely, the parallel flows and the derived ATC values were not exact. Large safety margins are set to cope with this uncertainty. The result is a very conservative network exploitation. A more accurate way would be to simultaneously determine the capacity and energy flows in the market-coupling algorithm. This is the main idea behind FBMC.

The flow-based market coupling
The theoretical benefits of a FBMC compared to ATC can be demonstrated with figure 3. For a 3-zone network, the domain in which trade is allowed can be visualized in a two dimensional graph showing the net export position (NEX) of zone A and B (NEX of C is also determined as the total balance has to be zero). A market outcome, shown as a dot on this graph, will be located within the domain. In the ATC system, an estimation is used to determine the parallel flows. Assuming these flows the exchange limits are drawn. These are straight lines (shown in green) that demarcate the ATC domain. The flow-based domain (shown in blue) on the other hand, determines the limits for exchange between zones considering all possible exchanges of the other zones. This domain takes the physical line constraint of the network accurately into account. Assuming that dot 2 (see figure 3) would be the optimal trade solution, the ATC method would assume this point as infeasible. The FBMC allows the optimal trade solution and therefor unlocks the full potential interconnection capacity. Accurately taking in account the network constraints additionally enables the use of smaller safety margins, which makes even more trade possible.

There is much to gain with a clearly defined, simple and transparent FBMC that precisely takes into account the physical flows; more trade, more security of supply and better investment incentives (3). Certainly when unpredictable renewables will further penetrate the market, the flow-based market coupling has the potential to perform better than the current ATC market coupling, as the flow-based capacity calculations are less dependent on market outcome estimations. The current FMBC implementation clearly is a step in the right direction. Yet, it fails to completely unlock the benefits of the flow-based theory.

European collaboration: the key to success
To reach an accurate flow-based market coupling it is of crucial importance that all parties involved exchange their information and that they also determine this information in the same way. In the current FBMC proposal the different TSOs use different capacity calculation methodologies and some important parameters are not clearly defined (4). This results in inconsistencies and inaccurate modeling of flows. To elaborate a highly accurate FBMC, more collaboration between the transmission system operators and power exchanges is necessary. Achieving a unified implementation won’t be easy. These parties all have their own interests and goals. Yet, the collaboration is crucial to arrive at a performant FBMC implementation.

The quest for security of supply in the electricity sector is resulting in very lucrative, expensive and exotic proposals that often propose a complete redesign of the system. However, the solution might be closer than we believe. A good infrastructure is at our disposal. It is just not used to its limits. A FBMC could push the network to its limits while keeping operational security. The current FBMC unfortunately lacks simplicity and uniformity to exploit the full potential of the flow-based approach. A harmonized and clear implementation is necessary to achieve the desired accuracy. As so often the key to success and security of supply could lay in European collaboration.


Methoden voor het bepalen van de flowbased capaciteitsparameters:beschrijving, evaluatie en verbeteringen Sinds de liberalisering van de elektriciteitsmarkt is de Europese Unie op zoek naar economisch efficiënte en transparante marktmechanismen. Om de markten van de verschillende landen te koppelen is het echter noodzakelijk om rekening te houden met de netwerkbeperkingen. De implementatie van deze randvoorwaarden is echter niet eenvoudig. Een hybride flow-based aanpak werd ontwikkeld onder de naam flow-based marktkoppeling (FBMC). De FBMC wordt momenteel geïmplementeerd in het Centraal-West-Europese marktgebied op de day-ahead marktkoppeling. Voor de implementatie en het functioneren werken elektriciteitsbeurzen (PXs) entransmissienetbeheerders (TSOs) samen om de input-parameters te bepalen en vervolgens het optimalisatie algoritme uit te voeren. Voor de invoerparameters van deze implementatie, nl. de flow-based capaciteitsparameters worden veel veronderstellingen en schattingen gebruikt. De parameters zijn niet eenduidig gedefinieerd en er is nog steeds onduidelijkheid omtrent hun impact op de oplossing. In dit proefschrift wordt een poging gedaan om de technische uitvoering van de flow-based marktkoppeling te beschrijven en de impact van de flow-based capaciteit parameters op de oplossing te onderzoeken. Op deze manier hopen we meer inzicht te geven en onduidelijkheden weg te werken. Uit eerdere studies en tests, uitgevoerd tijdens het afgelopen jaar, werd reeds geconcludeerd dat de voorgestelde flow-based marktkoppeling-implementatie beduidend beter presteert dan de ATC-gebaseerde marktkoppeling. In deze studie wordt de FBMC vergeleken met een ideale nodale marktkoppeling. Na een uitgebreide beschrijving van de flow-based marktkoppeling-implementatie, wordt een evaluatie gemaakt met behulp van een simulatiemodel. De focus ligt op de theoretische fundamenten van de FBMC. De evaluatie is conceptueel en dus niet gebaseerd op de werkelijke data. Vanuit de inzichten die werden verworven worden in het laatste deel voorstellen voor verbeteringen gemaakt. Vanuit de analyse kan worden geconcludeerd dat de huidige methodes die in de FBMC worden gebruikt tot significant lager sociaal welzijn leiden dan een ideale nodale marktkoppeling in gecongesteerde situaties. Dit is hoofdzakelijk te wijten aan onjuiste veronderstellingen en schattingen die worden gebruikt voor de bepaling van de flow-based capaciteitsparameters. Er iszeker ruimte voor verbetering. Met betrekking tot verbeteringen worden twee categorieën onderscheiden: het gebruik van betere veronderstellingen en het gebruik van minderveronderstellingen. Ten eerste kunnen de schattingen en veronderstellingen worden verbeterd door meer samenwerking tussen de TSOs. Dit wordt bewezen aan de hand van hetsimulatiemodel. Ten tweede wordt een alternatief voorstel gedaan voor een flow-based marktkoppeling die door middel van een iteratieve aanpak minder wordt beïnvloed door aannames en schattingen. Een simulatiemodel met deze aanpak toonde aanzienlijke verbeteringen aan de rechtvaardigheid en de accuraatheid van gemodelleerde stromen. Dit leidt bijgevolg tot een hoger sociaal welzijn van de marktoplossing. Verder onderzoek met meer realistische gegevens moet worden gedaan om de verbetering van deze methode te kwantificeren en om de stabiliteit van het iteratieve proces te onderzoeken.



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