Reduction of the market splitting occurrences: A Dynamic Line Rating approach for the 2030 Iberian day-ahead market scenarios

This article focused on a methodology to detect the impact of using Dynamic Line Rating (DLR) in the Iberian market with high penetrations of variable renewable generations (in 2030).  Aligned with previous studies, this research identified that DLR increases transmission capacity by an average of 30% over the Seasonal Line Rating (SLR) approach. However, for around 3% of the time, the DLR capacity is below limits set by the Transmission System Operator (TSO), potentially causing line saturation, degradation, or even damage in severe cases. The study’s findings reveal that integrating DLR into cross-border capacities reduces the frequency of market splitting events in the Day-Ahead Market (DAM) from 1,512 to 514, enhancing price consistency. This shift also lowers price disparities from €19/MWh (SLR approach) to €12/MWh (DLR approach) in these events, resulting in an overall reduction of more than 1% in wholesale electricity prices. Adopting DLR could be instrumental in reaching the 2030 renewable energy goals. In the long term, it may reduce the need for new transmission line development, while in the short term, DLR can help prevent grid congestion, reduce market splitting, and limit curtailment of renewable generation.