Market Coupling and the Organization of Counter-Trading: Separating Energy and Transmission Again?

This paper deals with congestion management in market coupling. We analyze different market coupling models where the organization of counter-trading on the transmission market depends on the degree of coordination among Transmission System Operators. We discuss this issue by comparing two alternative zonal configurations of a six node market. We show the inefficiencies of the separation of the energy and the transmission markets implied by market coupling and how counter-trading’s outcomes depend on the situation on hand. We contribute to the literature by using the notion of Generalized Nash Equilibrium to describe counter-trading problems.