What if Italy had one single market zone on day-ahead

If you are involved in energy management and actively work on the day-ahead electricity market, you already know that the Italian market has some specificity.

The first: due to geography, there are seven different regional market. Each market having its own price on day-ahead.

The second: whatever the location, any end-user must pay the electricity at the same price. Despite internal congestion and different regional prices. This is what is called PUN.

But what could happen if the Italian market was made of one single market region, like France or Germany?

To provide a first answer to this question, I’ve downloaded market data from GME website, from 28-sep-2022 to 03-oct-2022. From those data, I’ve extracted the PUN and the so called “Italy (unconstrained)”, which represent the price in Italy without any network constrained, that mean one single market area, that mean no PUN.

You can see some plots in the picture. On average, PUN = ITA_UC + 5,27. This simply is an empirical confirmation that the optimization problem solved for the case “Italy (unconstrained)” is a relaxation of the one actually solved with network constraints and PUN constraints.