Modelling single price area interconnections in the EU electricity market

The EU Internal Market for Electricity is facing important changes to ensure a smooth transition to a fully decarbonized system by 2050, where non-dispatchable renewable energy sources (RES) have a crucial role to play. To improve market efficiency, RES integration and power system balancing, increasing cross borders interconnections and cooperation among member states are some of the main EU goals. This paper reviews the existing literature and markets models dealing with multi-zone interconnections capacity allocation for energy and balancing reserves, and proposes an inter-zonal capacity allocation mechanism for energy and secondary reserve capacity based on a system costs minimization which has been integrated into the CEVESA market model and applied to a realistic case study.