Market zone configuration under collusive bidding among the conventional generators and renewable energy sources in the day-ahead electricity market

The European cross-zonal day-ahead (DA) electricity market is transitioning to the flow-based market coupling model for market clearing. With the increasing integration of renewable energy sources (RESs), market participants have opportunities for collusive bidding, resulting in decreased social welfare (SW). Thus, this paper is the first to propose an approach to configure the market zone (MZ) considering collusive bidding among conventional generators (CGs) and RESs in the DA market. Specifically, a bi-level model is developed to analyze collusive bidding among the CGs and RESs. Then, multi-dimensional market performance indices are used to determine the critical branches (CBs), on which the configuration of MZs is based. Finally, test 6-bus and simplified European systems are used to demonstrate the validity and merit of the proposed approach. Our simulation on the 6-bus system shows that when compared with the initial zonal market (ZM), the SW of the optimized ZM increased by 18 %, while the re-dispatch surrogate cost decreased to 0. Also, the penetration of RESs improved by 12 %, which guarantees the development of RESs.