Comparison of Congestion Management Techniques: Nodal, Zonal and Discriminatory Pricing

Wholesale electricity markets use different market designs to handle congestion in the transmission network. We compare nodal, zonal and discriminatory pricing in general networks with transmission constraints and loop flows. We conclude that in large games with many producers and certain informatio...

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Bibliographic Details
Published inThe Energy journal (Cambridge, Mass.) Vol. 36; no. 2; pp. 145 - 166
Main Authors Holmberg, Pär, Lazarczyk, Ewa
Format Journal Article
LanguageEnglish
Published Los Angeles, CA Energy Economics Education Foundation 01.04.2015
SAGE Publications
International Association for Energy Economics
Sage Publications Ltd. (UK)
Subjects
Analysis
Congestion
Constraints
Electric power transmission
Electricity pricing
Investments
Management
Management techniques
Markets
Methods
Congestion management
Zonal pricing
Wholesale electricity market
Transmission network
Large game
Counter-trading
Discriminatory pricing
Nodal pricing
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Summary:Wholesale electricity markets use different market designs to handle congestion in the transmission network. We compare nodal, zonal and discriminatory pricing in general networks with transmission constraints and loop flows. We conclude that in large games with many producers and certain information, the three market designs result in the same efficient dispatch. However, zonal pricing with counter-trading results in additional payments to producers in export-constrained nodes, which leads to inefficient investments in the long-run.
ISSN:0195-6574
1944-9089
1944-9089
DOI:10.5547/01956574.36.2.7