Uncertainty-Aware Capacity Allocation in Flow-Based Market Coupling

Abstract: The effective allocation of cross-border trading capacities is one of the central challenges for the implementation of a pan-European internal energy market. In contrast to traditional power flow-ignorant methods like net transfer capacities (NTC), flow-based market coupling (FBMC) has been shown to increase price convergence between market areas, while improving congestion management effectiveness. However, explicitly analysing FBMC for a future power system with a very high share of intermittent renewable generation is often overlooked in the current literature. This paper provides a comprehensive summary on the technical specification of the FBMC process and FBMC modeling methods. It discusses implications of policy considerations and explicitly discusses the impact of high-shares of intermittent generation on FBMC performance. Further, we propose probabilistic security margins compatible with the current FBMC implementation to better account for renewable uncertainty in FBMC modeling. We conduct numerical experiments on the IEEE 118 bus test system to showcase the proposed model formulations and our data and implementation is published open source.