Impact of Generation Shift Key determination on flow based market coupling

Although Flow Based Market Coupling (FBMC) attempts to predict physical line flows, the algorithm is prone to errors. The cause of prediction errors bases on the dependency of FBMC on linearized parameters like the Generation Shift Keys (GSK). The value of GSK is determined by the calculation strategy and the considered power plants. This paper investigates the impact of both influences under the implementation of a detached Austrian bidding zone in the Central Western European Region (CWE). The results show significant impact of GSK values on the European harmonization process as well as on trade, welfare and congestions for single bidding zones whereas no strategy emerge as generally beneficial.