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Comparison of congestion management techniques: Nodal, zonal and discriminatory pricing

Pär Holmberg and Ewa Lazarczyk
Authors registered in the RePEc Author Service: Ewa Lazarczyk () and Pär Holmberg ()

The Energy Journal, 2015, vol. Volume 36, issue Number 2

Abstract: 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.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2015
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