 Market-Based Redispatch May Result in Inefficient DispatchVeronika Grimm, Alexander Martin, Christian Sölch, Martin Weibelzahl and Gregor Zöttl The Energy Journal, 2022, vol. 43, issue 5, 205-230 Abstract: In this paper we analyze a uniform price day-ahead electricity spot market that is followed by redispatch in the case of network congestion. We assume that the transmission system operator is incentivized to minimize redispatch cost and compare cost-based redispatch (CBR) to market-based redispatch (MBR) mechanisms. For networks with at least three nodes we show that in contrast to CBR, in the case of MBR incentives to minimize redispatch cost are in general not efficient in the context of our short-run analysis. This obtains both for pay-as-bid as well as locational marginal prices used for MBR compensation. As we demonstrate, moreover, in case of MBR the possibility of the transmission system operator to inefficiently reduce redispatch cost at the expense of decreased overall welfare can be driven both by the electricity supply side and the electricity demand side.Our results highlight a novel and important aspect regarding the design and the desirability of congestion management regimes in liberalized electricity markets. Keywords: Electricity markets; Redispatch; Congestion management; Computational equilibrium models (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:43:y:2022:i:5:p:205-230 DOI: 10.5547/01956574.43.5.csol Access Statistics for this article More articles in The Energy Journal |
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