FTR Allocations to Ease Transition to Nodal Pricing: An Application to the German Power System

Friedrich Kunz, Karsten Neuhoff () and Juan Rosellon

No 1418, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: A shift from zonal pricing to smaller zones and nodal pricing improves efficiency and security of system operation. Resulting price changes do however also shift profits and surplus between and across generation and load. As individual actorscan lose, they might oppose any reform. We explore how free allocation of financial transmission rights to generation and load can be used to mitigate the distributional impact. In a three node network we explore the fundamental effects with regard to reference node/hub for FTRs, the share of FTRs to be allocated for free and the metric to determine the proportion of rights allocated to different generation and load. We test the results in a more realistic setting based on hourly modelling of the German power system at nodal representation.

Keywords: Electricity market; financial transmission right; congestion management; market design; Germany (search for similar items in EconPapers)
JEL-codes: D47 L52 L94 Q40 (search for similar items in EconPapers)
Pages: 27 p.
Date: 2014
New Economics Papers: this item is included in nep-ene, nep-eur and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: FTR allocations to ease transition to nodal pricing: An application to the German power system (2016)
Journal Article: FTR allocations to ease transition to nodal pricing: An application to the German power system (2016)
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