Simulation of a bid-based dispatch subject to inter-zonal transmission constraints

The opening of a power exchange in Italy is expected for early 2004. Among the market rules, the system operator established that the bid-based dispatch of generation in the day-ahead energy market would rely on a zonal model for transmission congestion. This work is based on an empirical simulation of the day-ahead market. In addition, the bid-based merit order was also implemented on a detailed model of the Italian transmission network. Given the extreme importance of the definition of inter-zonal constraints, a specific procedure was developed to determine such limits: it was based on the homothetic approach, consisting in successive power generation increments and decrements in the two zones separated by the interface under analysis. This overall analysis provides significant insights on the need to carefully define zones and inter-zonal limits when accounting for power flows that no longer derive from a cost-based merit order.