Assessing the impact of transmission investments on the Italian Ancillary Services Market using MODIS simulator

The justification of transmission investments is becoming more complex and challenging with respect to the past decades since environmentally friendly solutions shall be adopted and the benefits for the society must be clearly highlighted and quantified. Clear and objective indicators of the benefits arising from transmission projects are playing a key role to foster the acceptability of the new Infrastructures from the general public and the local authorities. Furthermore, in the process of the power system decarbonisation, the presence of a massive share of non-programmable RES generation makes very relevant the volume of energy exchanged in the ancillary services and balancing markets (ASM), as well as the related costs that are transferred to the electricity bills of the final consumers. In this framework more and more frequently transmission infrastructures and also storage devices are justified by benefits related to the cost reduction in the ASM.
This paper presents an innovative simulation tool called MODIS, developed by CESI on behalf of Terna, that allows to quantitatively evaluate the impact on the ASM arising from a new transmission infrastructure or storage device in a planning perspective. From the outcomes of the day-ahead market, the computational tool simulates the redispatching process at minimum costs hour by hour over a whole year to ensure the fulfilment of the operational constraints. In Italy the ASM is structured as a multi-zonal pay-as-bid market with specific reserve criteria and must run units differentiated by zone. The complex Mixed-Integer Programming problem is solved through a branch-and-bound algorithm.
Firstly, the accuracy of the yearly based ASM simulation is shown by means of a backward test applied to the year 2015. Then, some case studies are presented highlighting that for some projects a substantial part of the benefits is more related to the cost reduction in the ASM rather than in the day-ahead market.
The MODIS simulation tool represents an important building block to simulate on a wider pan-European scale the cross-border coupling of the national ancillary services and balancing markets. To this purpose, the MODIS simulator has been implemented in a modular way, so to easily add new constraints or modify the existing ones .​​​