From nodal to zonal pricing: A bottom-up approach to the second-best

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractCongestion management schemes have taken a prominent place in current electricity market design discussions. In this paper, the implications of establishing zonal pricing in Europe are analyzed with regard to potential zonal delimitations and associated effects on total system costs. Thereby, a nodal model sets the benchmark for efficiency and provides high-resolution input data for a cluster analysis based on Ward's minimum variance method.The proposed zonal configurations are tested for sensitivity to the number of zones and structural changes in the electricity market. Furthermore, dispatch and redispatch costs are computed to assess the costs of electricity generation and transmission. The results highlight that suitable bidding zones are not bound to national borders and that losses in static efficiency resulting from the aggregation of nodes into zones are relatively small. JEL classification: C38, C63, L51, Q41

Power Market Design Beyond 2020: Time to Revisit Key Elements?

“…This has triggered additional interest revisiting the question of the geographical definition of pricing zones (see e.g. Breuer and Moser, 2014;Burstedde, 2012). Smaller pricing zones offer two benefits: First, they reduce the likelihood of transmission constraints occurring within a zone (the cause of loop flows) and thus the need for reserving transmission capacity between zones (to accommodate these loop flows) and the need for redispatch.…”

A Nodal Pricing Model for the Nordic Electricity Market

“…the Bergen 1 and Bergen 2 cut constraints are removed in the OptFlow model. The relaxation will change the optimal nodal and zonal prices, while the simplified zonal prices will be unaffected, since the cut constraints are not directly included in this price calculation 5 . Table 3: Prices under relaxed Bergen security constraints -Case 1.…”

“…Table 3 shows four sets of prices. Actual Nord Pool Spot prices are given in the first price column (corresponding to (I) and (II) in Table 2), while the second and third columns show, 5 In practice, the cut constraints may affect the import and export capacities that the system operators set between the bidding areas, and which are given to the Elspot market clearing. …”

“…The NEULING model that calculates minimal generation dispatch and re-dispatch is used to test the effects of introducing zonal pricing in Europe under a number of proposed zonal configurations in [5]. Generation and load data used is given on a regional level.…”

Two price zones for the German electricity market — Market implications and distributional effects

“…Using a six-node demonstration network, Oggioni and Smeers (2013) show that the configuration of bidding zones and especially the determination of NTCs between the zones are crucial for the efficiency of a zonal pricing design, like the European market coupling. Burstedde (2012) analyzes potential bidding zones for the European electricity market. The paper clusters nodes in the network by locational marginal prices using cluster analysis.…”