| Summary: | The use of a zonal structure for energy markets across the globe is expanding; however the debate on how to effectively partition the grid into bidding zones is still open for discussion. One of the factors that needs to be addressed in the process of bidding zones’ delimitation is the transmission system operators control areas. Merging parts of different control areas into one bidding zone can lead to multiple problems, ranging from political, through grid security concerns, to reserve control issues. To address it, this paper presents a novel grid partitioning method aimed at bidding zones delimitation that is based on clustering the power grid using an extended version of the standard agglomerative clustering. The proposed solution adds additional clustering rules when constructing the dendrogram in order to take into account the control areas. The algorithm is applied to the data which represents the locational marginal prices obtained from optimal power flow analysis.
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