The need for system balance restoration after congestion management: an examination of Iberian congestion management markets

Abstract

The Iberian electricity markets use a dedicated congestion management market to address network constraint violations arising from zonal day-ahead market dispatches. This market operates in two phases: the first phase resolves local congestion through redispatch, while the second phase restores the balance between generation and demand. This study evaluates the effectiveness of this two-phase approach in the context of a rapidly evolving energy sector. We identify inefficiencies in the current two-phase DACM model and examine the performance of an alternative approach which involves addressing the imbalances after day-ahead congestion management in the balancing market. Using a nine-node system, we demonstrate that each model has its strengths and weaknesses, depending on predicted system conditions. Our findings suggest that a dynamic market model, which adapts based on real-time predictions, offers the greatest efficiency. This adaptive model effectively addresses the challenges posed by intraday trading and the availability of flexible resources, thereby enhancing overall market performance.