Locational marginal pricing-based allocation of transmission capacity in multiple electricity markets

In recent years, there has been an increasing interest in energy exchange among the electricity markets. This subject, especially in Europe, has been identified as a market coupling. The issue of congestion management in multiple electricity markets or market coupling has been controversial and has resulted in some disputed subjects. The locational marginal pricing-based allocation of transmission capacity for congestion management and clearing of multiple electricity markets, in which market participants can place their bids simultaneously in different markets across an interconnection, is proposed. In this framework, the markets dispatch energy and reserve, independently. A central coordinator entity, then, runs economically the allocation of transmission capacity among the electricity markets. Three methods for simultaneous clearing of energy and reserve in the framework are also proposed. The possibility of implementation of the proposed methods in multiple markets is discussed. The numerical results for a three-area 15-bus test system in a triple-market case are presented to demonstrate the effectiveness of the proposed approach as compared with other approaches.