Review of the Mathematic Models to Calculate the Network Indicators to Define the Bidding Zones

This paper presents a critical review of the mathematical models proposed in literature for determining transmission network indicators to be considered when model-based algorithms are adopted for defining suitable bidding zone configurations for the electricity markets. In details, based on a set of selected scientific papers, this paper identifies the main network indicators (e.g. Locational Marginal Price, Power Transfer Distribution Factors etc.) and critically assesses which are the factors that influence their values. The conclusion is that no "one fits all" solution exists, since a perfect representation of all system constraints would result in a very computationally expensive model. Therefore, an optimal compromise between the numerical performances and the complexity of the model must be found; currently, this optimum has not yet been achieved.