Nodal, zonal, or uniform electricity pricing: how to deal with network congestion

2017, Volume 11, Issue 2

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Frontiers in Energy >> 2017, Volume 11, Issue 2 doi: 10.1007/s11708-017-0460-z

Nodal, zonal, or uniform electricity pricing: how to deal with network congestion

Friedrich-Alexander-University Erlangen-Nuremberg, Discrete Optimization, Cauerstr. 11, 91058 Erlangen, Germany; Energy Campus Nuremberg, Fürther Str. 250, 90429 Nuremberg, Germany

Accepted: 2017-03-28 Available online: 2017-06-01

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Abstract

In this paper, the main contributions to congestion management and electricity pricing, i.e., nodal, zonal, and uniform electricity pricing, are surveyed. The key electricity market concepts are structured and a formal model framework is proposed for electricity transportation, production, and consumption in the context of limited transmission networks and competitive, welfare maximizing electricity markets. In addition, the main results of existing short-run and long-run congestion management studies are explicitly summarized. In particular, the important interconnection between short-run network management approaches and optimal long-run investments in both generation facilities and network lines are highlighted.

Keywords

nodal pricing ; zonal pricing ; uniform pricing ; competitive electricity markets ; welfare maximization ; redispatch ; optimization models

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