This paper focuses on the state-of-the-art of unit commitment (UC) and economic dispatch (ED) algorithms suitable for the Italian electricity market. In view of the spread of renewable energy systems (RES), the desired UC algorithm should be able to properly consider the uncertainty affecting key input variables into the formulation of the problem, as well as the different capabilities of dispatched power plants to provide ancillary services (e.g., voltage regulation). The goal of this paper is to resume the developments in UC and ED algorithms which occurred in the last decades, having a particular focus on alternating current (AC) security constrained (SC) approaches and stochastic ones, highlighting the advantages and weakness of each technique. This review is useful for the Italian TSO (Terna) to investigate what is the best solution to formulate a new algorithm to be potentially adopted in the framework of the Italian Ancillary Service Market, striving for an explicit modelization of stochastic variables and voltage constraints. This review is also useful to all system operators (SOs), independently to the market environment in which they operate, because UC algorithms are widely adopted to ensure real-time security of power systems. In conclusion, an SC-UC algorithm which takes into account both stochastic variables and AC formulation does not exist.

The definition of bidding zones is a relevant question for electricity markets. The bidding zones can be identified starting from information on the nodal prices and network topology, considering the operational conditions that may lead to congestion of the transmission lines. A well-designed bidding zone configuration is a key milestone for an efficient market design and a secure power system operation, being the basis for capacity allocation and congestion management processes, as acknowledged in the relevant European regulation. Alternative bidding zone configurations can be identified in a process assisted by the application of clustering methods, which use a predefined set of features, objectives and constraints to determine the partitioning of the network nodes into groups. These groups are then analysed and validated to become candidate bidding zones. The content of the manuscript can be summarized as follows: (1) A novel probabilistic multi-scenario methodology was adopted. The approach needs the analysis of features that are computed considering a set of scenarios defined from solutions in normal operation and in planned maintenance cases. The weights of the scenarios are indicated by TSOs on the basis of the expected frequency of occurrence; (2) The relevant features considered are the Locational Marginal Prices (LMPs) and the Power Transfer Distribution Factors (PTDFs); (3) An innovative computation procedure based on clustering algorithms was developed to group nodes of the transmission electrical network into bidding zones considering topological constraints. Several settings and clustering algorithms were tested in order to evaluate the robustness of the identified solutions.

Over the last years, power systems around the globe experienced deep changes in their operation, mainly induced by the widespread of Intermittent Renewable Energy Sources (IRES). These changes involved a review of market and operational rules, in the direction of a stronger integration. At European level, this integration is in progress, driven by the new European guidelines and network codes, which deal with multiple issues, from market design to operational security. In this framework, the project TERRE (Trans European Replacement Reserve Exchange) is aimed at the realization of a European central platform, called LIBRA, for the exchange of balancing resources and, in particular, for the activation of the procured Replacement Reserve (RR) resources. The Italian Transmission System Operator (TSO), TERNA, is a participant of the project and it is testing new methodologies for the sizing of RR and its required activation throughout the TERRE process. The aim of the new methodologies is to find areas of potential improvement in the sizing of RR requirements and activation, which open up the possibility for a reduction of the procurement cost, without endangering the security of the power system. This paper describes a new RR sizing methodology, proposed by TERNA, which is based on a persistence method, showing its results on real data and highlighting key advantages and potential limitations of this approach. In order to overcome these limitations, a literature review on alternative approaches has been carried out, identifying nowcasting techniques as a relevant alternative for the very short term forecast horizon. These one could be further investigated and tested in the future, using the proposed persistence method as a benchmark.

In this paper an optimization problem designed to calculate electric grid specific indicators to be used within model-based methodologies for the definition of alternative electricity market bidding zone configurations is designed. The approach integrates within the framework of a bidding zone review process aligned to the specifications of the Commission Regulation (EU) 2015/1222 (CACM) and Regulation (EU) 2019/943 of the European Parliament and of the Council (CEP). The calculated solution of the optimization provides locational marginal prices and allows to determine, outside the optimization problem, the power transfer distribution factors for critical elements. Both indicators can be used as inputs by specially designed clustering algorithms to identify model-based electricity market bidding zone configurations, as alternative to the current experience-based configurations. The novelty of the optimization problem studied in this paper consists in integrating the N-1 security criteria for transmission network operation in an explicit manner, rather than in a simplified and inaccurate manner, as encountered in the literature. The optimization problem is evaluated on a set of historical and significant operating scenarios of the Italian transmission network, carefully selected by the Italian transmission system operator. The results show the optimization problem capability to produce insightful results for supporting a bidding zone review process and its advantages with respect to simplified methodologies encountered in the literature.

Over the last few years, a strong penetration of Intermittent Renewable Energy Sources (IRES) has been in progress in the Italian power system. In this new framework, the dispatching activity must improve its efficiency to ensure adequacy and security of the national electricity system. European market integration initiatives are making this goal achievable, provided that the coherency of market price signals and reserve procurement at the European level are guaranteed. For this reason, the Italian Transmission System Operator (TSO), Terna, started to investigate the opportunity to align the Italian reserve-procurement approach to the one adopted in most European countries, procuring Replacement Reserve (RR) in dedicated auctions held in advance of the day-ahead market. The aim of this new methodology is to improve the coherency of price signals arising from the integrated European day-ahead market, anticipating potential scarcity conditions, thus helping to keep adequacy standards high. This paper describes the characteristics of a possible new reserve-procurement model based on the European benchmark. Comparative simulations are presented, estimating the impact of the new approach in terms of outcomes and costs of both the energy and ancillary services markets in Italy. The results of this study suggest activation of the reserve auction only in the cases in which the TSO expects a potential risk of simultaneous reserve scarcity across European countries.