In a liberalized electricity market with an economic merit based dispatch, “grid congestion” is talked about when the electricity flows, corresponding to the production and consumption schedules defined by the spot market and bilateral contracts, are incompatible with the transmission capacity allowed by the grid. In Italy, for the Daily and the Adjustment Market, the Discipline of the Electricity Market [1, 2] provides for the employment of a “zonal” technique to solve congestions, with the possible formation of market areas with different energy selling prices; from the demand side, a single national price is applied. An additional and specific market will manage the resolution of grid congestions internal to the zones. Congestion resolution techniques based on nodal prices are used in other electricity markets, where the liberalization process is at a more advanced stage (among these, some states in the north east of the U.S.A.). In such markets the operators that consume or produce electricity, respectively pay and receive prices that depend on the grid node they are connected to. The use of a nodal price technique allows collecting very punctual and localized economic signals; in addition, such a methodology limits the inevitable approximations typical of a predefinition of market zones, as it is based on a detailed representation of the grid. On the other hand, the use of a nodal technique instead of a zonal method implies a severe increase of computational times and a major discontinuity in operator treatment; this choice must therefore be suitably justified by a more precise incentive to the rational use of the grid. In this paper the nodal and zonal techniques for electricity price definition are described and compared from a qualitative and numerical point of view, both on a test network and a realistic case related to the Italian grid. The technical and economical results are analyzed in terms of sale revenues, customer costs, rules transparency, congestion fees and incentive to a market-based system development. The paper also examines the possibility, if a zonal technique is applied, of using the results of a nodal analysis to define with suitable criteria the grid zones.
Nodal and zonal techniques for electricity price definition
MARRACCI, MIRKO;POLI, DAVIDE
2004-01-01
Abstract
In a liberalized electricity market with an economic merit based dispatch, “grid congestion” is talked about when the electricity flows, corresponding to the production and consumption schedules defined by the spot market and bilateral contracts, are incompatible with the transmission capacity allowed by the grid. In Italy, for the Daily and the Adjustment Market, the Discipline of the Electricity Market [1, 2] provides for the employment of a “zonal” technique to solve congestions, with the possible formation of market areas with different energy selling prices; from the demand side, a single national price is applied. An additional and specific market will manage the resolution of grid congestions internal to the zones. Congestion resolution techniques based on nodal prices are used in other electricity markets, where the liberalization process is at a more advanced stage (among these, some states in the north east of the U.S.A.). In such markets the operators that consume or produce electricity, respectively pay and receive prices that depend on the grid node they are connected to. The use of a nodal price technique allows collecting very punctual and localized economic signals; in addition, such a methodology limits the inevitable approximations typical of a predefinition of market zones, as it is based on a detailed representation of the grid. On the other hand, the use of a nodal technique instead of a zonal method implies a severe increase of computational times and a major discontinuity in operator treatment; this choice must therefore be suitably justified by a more precise incentive to the rational use of the grid. In this paper the nodal and zonal techniques for electricity price definition are described and compared from a qualitative and numerical point of view, both on a test network and a realistic case related to the Italian grid. The technical and economical results are analyzed in terms of sale revenues, customer costs, rules transparency, congestion fees and incentive to a market-based system development. The paper also examines the possibility, if a zonal technique is applied, of using the results of a nodal analysis to define with suitable criteria the grid zones.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
