IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v36y2015i2p145-166.html
   My bibliography  Save this article

Comparison of Congestion Management Techniques: Nodal, Zonal and Discriminatory Pricing

Author

Listed:
  • Par Holmberg
  • Ewa Lazarczyk

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 countertrading results in additional payments to producers in export-constrained nodes, which leads to inefficient investments in the long-run.

Suggested Citation

  • Par Holmberg & Ewa Lazarczyk, 2015. "Comparison of Congestion Management Techniques: Nodal, Zonal and Discriminatory Pricing," The Energy Journal, , vol. 36(2), pages 145-166, April.
  • Handle: RePEc:sae:enejou:v:36:y:2015:i:2:p:145-166
    DOI: 10.5547/01956574.36.2.7
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.36.2.7
    Download Restriction: no

    File URL: https://libkey.io/10.5547/01956574.36.2.7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Richard Green, 2007. "Nodal pricing of electricity: how much does it cost to get it wrong?," Journal of Regulatory Economics, Springer, vol. 31(2), pages 125-149, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pär Holmberg, 2025. "The inc-dec game and how to mitigate it," Working Papers EPRG2501, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Mario Blazquez Paz, 2024. "Production or transmission investments? A comparative analysis," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(4), pages 957-1000, December.
    3. Holmberg, Pär, 2024. "The Inc-Dec Game and How to Mitigate It," Working Paper Series 1512, Research Institute of Industrial Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simshauser, Paul, 2024. "On static vs. dynamic line ratings in renewable energy zones," Energy Economics, Elsevier, vol. 129(C).
    2. Grimm, Veronika & Schewe, Lars & Schmidt, Martin & Zöttl, Gregor, 2017. "Uniqueness of market equilibrium on a network: A peak-load pricing approach," European Journal of Operational Research, Elsevier, vol. 261(3), pages 971-983.
    3. Newbery, David & Strbac, Goran & Viehoff, Ivan, 2016. "The benefits of integrating European electricity markets," Energy Policy, Elsevier, vol. 94(C), pages 253-263.
    4. Paul Simshauser & Farhad Billimoria & Craig Rogers, 2021. "Optimising VRE plant capacity in Renewable Energy Zones," Working Papers EPRG2121, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    5. Savelli, Iacopo & Morstyn, Thomas, 2021. "Electricity prices and tariffs to keep everyone happy: A framework for fixed and nodal prices coexistence in distribution grids with optimal tariffs for investment cost recovery," Omega, Elsevier, vol. 103(C).
    6. Johannes Mauritzen & Genaro Sucarrat, 2022. "Increasing or Diversifying Risk? Tail Correlations, Transmission Flows and Prices across Wind Power Areas," The Energy Journal, , vol. 43(3), pages 105-131, May.
    7. Steffen, Bjarne, 2012. "Prospects for pumped-hydro storage in Germany," Energy Policy, Elsevier, vol. 45(C), pages 420-429.
    8. Sarfati, Mahir & Hesamzadeh, Mohammad Reza & Holmberg, Pär, 2018. "Increase-Decrease Game under Imperfect Competition in Two-stage Zonal Power Markets –​ Part I: Concept Analysis," Working Paper Series 1253, Research Institute of Industrial Economics.
    9. Ambrosius, M. & Egerer, J. & Grimm, V. & Weijde, A.H. van der, 2020. "Uncertain bidding zone configurations: The role of expectations for transmission and generation capacity expansion," European Journal of Operational Research, Elsevier, vol. 285(1), pages 343-359.
    10. Adriaan Weijde & Benjamin Hobbs, 2011. "Locational-based coupling of electricity markets: benefits from coordinating unit commitment and balancing markets," Journal of Regulatory Economics, Springer, vol. 39(3), pages 223-251, June.
    11. Simshauser, Paul, 2021. "Renewable Energy Zones in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 101(C).
    12. Neuhoff, Karsten & Barquin, Julian & Bialek, Janusz W. & Boyd, Rodney & Dent, Chris J. & Echavarren, Francisco & Grau, Thilo & von Hirschhausen, Christian & Hobbs, Benjamin F. & Kunz, Friedrich & Nabe, 2013. "Renewable electric energy integration: Quantifying the value of design of markets for international transmission capacity," Energy Economics, Elsevier, vol. 40(C), pages 760-772.
    13. Petropoulos, Georgios & Willems, Bert, 2020. "Long-term transmission rights and dynamic efficiency," Energy Economics, Elsevier, vol. 88(C).
    14. Dzikri Firmansyah Hakam, 2018. "Nodal Pricing: The Theory and Evidence of Indonesia Power System," International Journal of Energy Economics and Policy, Econjournals, vol. 8(6), pages 135-147.
    15. Vincent Rious & Yannick Perez & Philippe Dessante, 2008. "Is combination of nodal pricing and average participation tariff the best solution to coordinate the location of power plants with lumpy transmission investments?," Post-Print hal-00323878, HAL.
    16. J. Zarnikau & C. Woo & R. Baldick, 2014. "Did the introduction of a nodal market structure impact wholesale electricity prices in the Texas (ERCOT) market?," Journal of Regulatory Economics, Springer, vol. 45(2), pages 194-208, April.
    17. Wichsinee Wibulpolprasert, 2016. "Optimal Environmental Policies and Renewable Energy Investment in Electricity Markets," PIER Discussion Papers 47, Puey Ungphakorn Institute for Economic Research.
    18. Leuthold, Florian & Weigt, Hannes & von Hirschhausen, Christian, 2008. "Efficient pricing for European electricity networks - The theory of nodal pricing applied to feeding-in wind in Germany," Utilities Policy, Elsevier, vol. 16(4), pages 284-291, December.
    19. Triolo, Ryan C. & Wolak, Frank A., 2022. "Quantifying the benefits of a nodal market design in the Texas electricity market," Energy Economics, Elsevier, vol. 112(C).
    20. Holmberg, P. & Lazarczyk, E., 2012. "Congestion management in electricity networks: Nodal, zonal and discriminatory pricing," Cambridge Working Papers in Economics 1219, Faculty of Economics, University of Cambridge.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:36:y:2015:i:2:p:145-166. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.