Approximating the flow-based domain for long-term market analysis in hydropower-dominated power systems

Flow-based market clearing will be implemented in the Nordic system in 2024. Nordic hydropower, with its large reservoirs require long-term production planning. Therefore, using exogenous flow-based constraints, we aim at approximating the flow-based domain of a model with a detailed description. First, we demonstrate that when using a detailed grid description, different aggregation schemes for power transfer distribution factors yield almost identical prices and reservoir handling. Using a flat aggregation scheme as the reference, three cases with exogenous grid constraints are compared. The power transfer distribution factors are kept the same, but the capacities on the critical network elements are chosen to be the maximum, minimum and median of the observed values. The results show that the case with median capacity can give a descent approximation of the prices obtained with detailed grid. The cases with minimum and maximum capacities can work as upper and lower bounds.