Economic congestion relief across multiple regions requires tradable physical flow-gate rights

This paper is concerned with market-based protocols for relieving congestion caused by transactions outside the control area in which the congestion occurred. One approach, proposed by Cadwalader et al. is based on dual decomposition in which out of area congestion is "priced-out" and added to the optimal power flow (OPF) objective function of the control area operator while the prices are determined iteratively via nodal energy adjustment bids. The paper demonstrates through a simple three node example that even with "correct prices" on out-of-area congested interfaces, the augmented AC-OPF objective function of a control area operator might not be locally convex at the optimal solution and hence the control area\´s optimal dispatch may violate the thermal constraints on out-of-area interfaces. That conclusion supports the alternative "flow-based" approach that enforces thermal limits more directly, which is consistent with North American Electric Reliability Council\´s (NERC\´s) FLOWBAT proposal for interzonal transmission load relief (TLR)