The impact of the formation of Bidding Zones on Capacity Allocation and Renewable penetration

From the latest 10 years, European electricity markets are facing new and hard challenges that force the TSOs to re-consider the organization of the network and markets. In this sense the European Union Agency for the Cooperation of Energy Regulators (ACER) released the First Edition of the Bidding Zone Review, a work focuses on studying the impact of Bidding zones configuration on network security and market efficiency, trying to obtain the better configuration for the future. The new capacity allocation method, the flow-based market coupling, started in CWE region, and the continuous growth of renewable penetration has a huge impact on the formation of zones. This work of thesis analyzes the impact of both on a network model, the IEEE Reliability test system, comparing different configuration of the network and varying the generation of renewable. First, it’s explained how the market works focusing on the day ahead market and its algorithm, using Italian market as benchmark. Secondly, it’s expounded how FBMC and RES penetration can influence the definition of BZs; then it’s reported the work of the Bidding Zones review, talking on the different approaches to define BZs and the evaluation criteria. Finally, a case study has been analyzed comparing different situation of renewable generation, allocation methods and changing the asset of the zones. At last results and conclusion are reported.