Techno-economic assessment of market coupling regimes in future electricity systems

Flow-based market coupling is the target model for European electricity markets. It enables increased exchange compared to the previously used net transfer capacity approach but might lead to increased congestions during grid operation, when minimum capacities are enforced. Therefore, considering the transmission grid becomes imperative in analysing the (future) European electricity markets. Market coupling and grid curtailment are determining factors for both the economic viability of investments in renewable energy sources and their actual share in the power mix. Given the delay in grid expansion, a comprehensive understanding of the interdependencies between market clearing and congestion management in the European electricity market is essential to foster effective investments and create an efficient market design.

In this thesis, an integrated framework is developed to investigate the impact of flow-based market coupling on market prices and the revenue potential of renewables. To this end, detailed transmission grid data is collected and processed for the existing and future grid in central Europe to simulate flow-based market coupling and the subsequent grid operation. ... mehrThe market model covers the coupled wholesale markets of 48 European bidding zones with a detailed representation of over 2000 thermal power plant units and includes (demand) flexibility providers such as demand response, power-to-heat and e-mobility applications. The approach leverages a highly detailed renewables expansion planning model that enables the simulation of (future) feed-in and demand profiles based on state-of-the-art weather reanalysis. Finally, a method is proposed to integrate approximate flow-based exchange limits in traditional market models that allows simulating market coupling more adequately while retaining the benefits of such models, such as a faster runtime and reduced memory requirements.

After quantifying the impacts of an expanded flow-based region and the effects of minimum exchange capacities introduced by the Clean Energy Package of the European Commission, the developed framework is applied to analyse the difference between the use of flow-based constraints and net transfer capacities for market coupling in highly flexible future energy systems with respect to prices, market values and curtailment needs. The results show that solar PV is most affected. With market value differences between -26 \% and 56 \%, the market coupling regime can determine the economic (non)viability of renewable projects. The reduction of CO\textsubscript{2} emissions in the market domain is more than outweighed by the increased activation of fossil power plants through re-dispatch.