Inter-regional market coordination: challenges and solutions

Summary form only given. The paper focus on the possibility of iterative procedures between areas in order to determine a dispatch as close to that of joint dispatch as possible, at least in the day ahead market. Such a procedure should be fast so that convergence can be achieved in no more than two iterations of the bid and re-bid procedure, and should not involve a total of more than two hours. We dwell on coupling the optimal dispatch procedure of areas via the locational marginal price for energy delivery at the nodes in the boundary between two areas. The mathematical complexity of such an optimal power flow solution was outlined. However, such re-dispatch decisions may alter the financial positions of generating entities in each area considerably from what it would have been, had the areas dispatched autonomously. Consequently, the question is that of distributing the resulting economic benefits "fairly" among the market participants by appropriate settlement rules and procedures. There are no simple solutions to such procedures. However, certain possible methods was proposed for consideration.