Market Integration of HVDC Lines.

Moving towards regional Supergrids, an increasing number of interconnections are formed by High Voltage Direct Current (HVDC) lines. Currently, in most regions, HVDC losses are not considered in market operations, resulting in additional costs for Transmission System Operators (TSOs). Nordic TSOs have proposed the introduction of HVDC loss factors in market clearing, to account for the cost of losses and avoid HVDC flows between zones with zero price difference. In this paper, we introduce a rigorous framework to assess the introduction of HVDC loss factors in flow-based market coupling. Our results apply to nodal and peer-to-peer markets as well. First, we focus on the identification of an appropriate loss factor. We propose and compare three different models: fixed, linear, and piecewise linear. Second, we introduce formulations to include HVDC losses in market clearing algorithms. Carrying numerical tests for a whole year, we find that accounting only for HVDC losses may lead to lower social welfare for a non-negligible amount of time. To counter this, this paper introduces a framework for including both AC and HVDC losses in a zonal or nodal pricing environment. We show both theoretically and through simulations that such a framework is guaranteed to increase social welfare.