Towards the Integration of Electricity Markets: System-wide and Local Solutions

The creation of an efficient, sustainable, and resilient energy system is of paramount importance in the European agenda. To reach this goal, the integration of the existing structures, and the proposal of new design paradigms are key factors. The contribution of the thesis goes along this line, by proposing two solutions to foster the electricity market integration. At system-wide level, a novel market clearing approach is proposed, to deal with some of the main issues of the European electricity market. At local level, a novel community microgrid market model is developed, where people can pool their resources, trade in a local electricity market, and provide ancillary services. The European market clearing problem is characterized by a set of heterogeneous orders and rules that force the implementation of heuristic and iterative solving methods. In particular, curtailable block orders and the uniform purchase price pose serious difficulties. A block order spans over multiple hours, and can be either fully accepted or fully rejected. The uniform purchase price prescribes that all consumers pay a common price in all the zones, while producers receive zonal prices, which can differ from one zone to another. The uniform purchase price scheme leads to a non-linear optimization problem involving both primal and dual variables, whereas block orders introduce multi-temporal constraints and binary variables into the problem. The market clearing problem in the presence of both the uniform purchase price and block orders is still an open issue in the European context. To deal with this integration problem, a novel, non-iterative, and heuristic-free approach is proposed, which results in a mixed-integer linear program, built starting from a non-linear integer bilevel program. At local level, the increasing share of renewable energy sources, and the availability of storage systems in distribution grids, pave the way to new market designs that favor the local usage of energy. Community microgrids fit in this context. A community microgrid is a collection of entities that pool their resources to achieve an efficient use of their assets. To foster the integration of entities at local level, a novel market model for community microgrid is proposed. By using the community, participants can match their demand and supply through an internal local market with a significant reduction of the exchanges with the grid. As a consequence, each participant can benefit from a reduction of its energy costs, a drop of the energy peak, and can effectively provide ancillary services to the grid. The proposed community model ensures that no entity is penalized by participating in the community. This requirement is termed Pareto superior condition. The proposed approach is structured as a bilevel model, which is then recast as a single mathematical program by using primal and dual relations. Numerical results and sensitivity analyses are reported to show the effectiveness of the two proposed approaches.