1 / 14

Congestion management in electricity networks: nodal, zonal and discriminatory pricing

Congestion management in electricity networks: nodal, zonal and discriminatory pricing. Pär Holmberg Research Institute of Industrial Economics (IFN) Ewa Lazarczyk IFN and Stockholm School of Economics. Contents. 1. Congestion management 2 . Assumptions 3 . Results 4 . Example.

sal
Download Presentation

Congestion management in electricity networks: nodal, zonal and discriminatory pricing

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Congestion management in electricity networks: nodal, zonal and discriminatory pricing Pär Holmberg Research Institute of Industrial Economics (IFN) Ewa Lazarczyk IFN and Stockholm School of Economics

  2. Contents 1. Congestion management 2. Assumptions 3. Results 4. Example

  3. Congestion management Discriminatory pricing Nodal pricing or Locational Marginal Pricing (LMP) Zonal pricing

  4. Congestion management: Nodal pricing 1 • Network divided into nodes separated by constrained transmission lines • Nodal price = price of the marginal offer in the node • All accepted bids/offers pay and are paid a local uniform-price associated with each node of the network • Can be used in complicated networks with possible losses, loops and congestion • Good investment incentives • Used in: • Chile, New Zealand, some US states

  5. Nodal pricing

  6. Congestion management: Zonal pricing • Simplification of nodal approach • Nodes are grouped into zones, within each zone nodes are priced identically – takes care of inter-zonal congestion • Zonal price is the price of the marginal offer in the zone • Counter trading – intra zonal congestion • Has 2 stages 1. Uniform price in zones 2. Discriminatory adjustment within the zone • Used in: • Nord Pool, Australia

  7. Zonal pricing

  8. Congestion management: Discriminatory pricing • All accepted bids and offers are paid according to their bid/offer • In case of transmission constraints system operator must consider congestion when accepting offers and bids • Used in: • UK, Italy

  9. Assumptions • One-shot game for each market design • General electricity network with possible losses, loops and congestion • Fringe of competitive producers in each node • Atomistic producers and consumers maximize their individual payoffs • Perfect information

  10. Results 1. Nodal pricing: Producers bid their marginal costs and consumers their marginal benefit Discriminatory pricing: All production with marginal cost at or below the nodal price in a node is offered at that price Pay-as-bid auction is identical to nodal pricing in terms of payoffs, efficiency, social welfare and dispatch

  11. Results 2. Zonal pricing with counter-trading: Dispatch for zonal pricing with counter-trading is the same as for nodal pricing and pay-as-bid design. However: some consumers and producers get extra payments for adjusting their production/demand. Specifically: • All producers from export constrained node are paid more than the price of the node • Some of those who are in the export constrained node are “paid” not to produce • Some of those who are in the import constrained node are “paid” not to consume

  12. Two node example in zonal design with counter trading Node 1: Max production 15 MW Demand 5 MW Node 2: Max production 15 MW Demand 18 MW N generators producing 1 MW Transmission constraint 4 MW Prices: P1=9 P2=14 Pz=14

  13. Zonal design with counter trading: Two node example

  14. Thank you! Ewa.Lazarczyk@hhs.se Par.Holmberg@ifn.se

More Related