Trading Hubs Construction for Electricity Markets

In this chapter, we consider a problem of constructing trading hubs in the structure of the electricity wholesale markets. The nodes of a trading hub are used to calculate a reference price that can be employed by the market participants for different types of hedging. The need for such a reference price is due to considerable variability of energy prices at different nodes of the electricity grid at different periods of time. The hubs construction is viewed as a mathematical programming problem here. We discuss its connections with clustering problems, consider the heuristic algorithms of solution and indicate some complexity issues. The performance of algorithms is illustrated on the real-life data.