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Degrees of Coordination in Market Coupling and Counter-Trading

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  • Giorgia Oggioni and Yves Smeers

Abstract

Cross-border trade remains a contentious issue in the restructuring of the European electricity market. This paper analyzes the cross-border trade problem through a set of models that represent different degrees of coordination both between the energy and the transmission markets and among national Transmission System Operators (TSOs). We first present a nodal price-like organization of the system, where Power Exchanges (PXs) and Transmission System Operators are integrated to operate the energy and transmission markets. This system is not implemented in Europe but its success elsewhere makes it the natural reference for the study. We then move to a more realistic representation of the European electricity market based on the so-called market coupling design where energy and transmission are operated separately by PXs and TSOs. We consider different degrees of coordination of the national TSOs' activities to assess the range of inefficiencies that the lack of integration can lead to. The paper supposes price taking agents and hence leaves aside the incentive to game the system induced by zonal systems.

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  • Giorgia Oggioni and Yves Smeers, 2012. "Degrees of Coordination in Market Coupling and Counter-Trading," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    • Handle: RePEc:aen:journl:33-3-03
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    Cited by:

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    4. Paul Simshauser & Farhad Billimoria & Craig Rogers, 2021. "Optimising VRE plant capacity in Renewable Energy Zones," Working Papers EPRG2121, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Simshauser, Paul, 2021. "Renewable Energy Zones in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 101(C).
    6. Pär Holmberg and Ewa Lazarczyk, 2015. "Comparison of congestion management techniques: Nodal, zonal and discriminatory pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    7. Diyun Huang & Geert Deconinck, 2024. "Breaking Borders with Joint Energy and Transmission Right Auctions—Assessing the Required Changes for Empowering Long-Term Markets in Europe," Energies, MDPI, vol. 17(8), pages 1-44, April.
    8. Felten, Björn & Osinski, Paul & Felling, Tim & Weber, Christoph, 2021. "The flow-based market coupling domain - Why we can't get it right," Utilities Policy, Elsevier, vol. 70(C).
    9. Bertsch, Joachim & Hagspiel, Simeon & Just, Lisa, 2016. "Congestion management in power systems - Long-term modeling framework and large-scale application," EWI Working Papers 2015-3, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    10. Neuhoff, Karsten & Barquin, Julian & Bialek, Janusz W. & Boyd, Rodney & Dent, Chris J. & Echavarren, Francisco & Grau, Thilo & von Hirschhausen, Christian & Hobbs, Benjamin F. & Kunz, Friedrich & Nabe, 2013. "Renewable electric energy integration: Quantifying the value of design of markets for international transmission capacity," Energy Economics, Elsevier, vol. 40(C), pages 760-772.
    11. Ruderer, Dominik & Zöttl, Gregor, 2018. "Transmission pricing and investment incentives," Utilities Policy, Elsevier, vol. 55(C), pages 14-30.
    12. Rossana Riccardi & Giorgia Oggioni & Elisabetta Allevi & Abdel Lisser, 2023. "Complementarity formulation of games with random payoffs," Computational Management Science, Springer, vol. 20(1), pages 1-32, December.
    13. Friedrich Kunz and Alexander Zerrahn, 2016. "Coordinating Cross-Country Congestion Management: Evidence from Central Europe," The Energy Journal, International Association for Energy Economics, vol. 0(Sustainab).
    14. Bjørndal, Endre & Bjørndal, Mette & Rud, Linda & Alangi, Somayeh Rahimi, 2017. "Market Power Under Nodal and Zonal Congestion Management Techniques," Discussion Papers 2017/14, Norwegian School of Economics, Department of Business and Management Science.
    15. Ron Berger & Moti Zviling, 2013. "The Relationship between Stakeholder Marketing and Reciprocity in Eastern Europe: A Conceptual Analysis," International Journal of Management, Knowledge and Learning, International School for Social and Business Studies, Celje, Slovenia, vol. 2(2), pages 149-164.
    16. Joachim Bertsch, & Tom Brown & Simeon Hagspiel & Lisa Just, 2017. "The relevance of grid expansion under zonal markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    17. Kunz, Friedrich & Zerrahn, Alexander, 2015. "Benefits of coordinating congestion management in electricity transmission networks: Theory and application to Germany," Utilities Policy, Elsevier, vol. 37(C), pages 34-45.

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