A market-based approach for enabling inter-area reserve exchange

Considering the sequential clearing of energy and reserves in Europe, enabling inter-area reserve exchange requires optimally allocating inter-area transmission capacities between these two markets. To achieve this, we provide a market-based allocation framework and derive payments with desirable properties. The proposed min-max least core selecting payments achieve individual rationality, budget balance, and approximate incentive compatibility and coalitional stability. The results extend the works on private discrete items to a network of continuous public choices. (C) 2021 The Author(s). Published by Elsevier B.V.

Automated summary

By optimizing the allocation of inter-area transmission capacities between European markets through a market-based framework and min-max least core selecting payments, individual rationality, budget balance, approximate incentive compatibility, and coalitional stability can be achieved. These results extend the works on private discrete items to a network of continuous public choices.