This study analyses the auctions organised by power exchanges in Europe. Power exchanges are institutions that facilitate wholesale trade in electric energy. Most exchanges organise separate auctions day ahead for every hour of the next day. Generators, large consumers, suppliers and traders fine-tune their portfolios via these trading platforms.
Most exchanges originally only organised trade within national borders. Increasingly, they are also involved in facilitating cross-border trade. The changing context implies new challenges but also renews the discussion on how former challenges have been addressed.
This work provides insight into the problems faced by exchanges. The auction problem is modeled as a constrained optimisation problem and alternative solutions are analysed. In its role of auctioneer, the exchange receives orders introduced by market parties and then decides which to accept and at which prices to settle the contracts. Taking this decision is not straightforward due to network constraints, order formats (block orders), and political constraints. The text is divided in three parts, respectively addressing these issues.Log in to post comments