Scandinavian Working Papers in Economics
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Research Institute of Industrial Economics (IFN) Working Paper Series

No 915:
Congestion Management in Electricity Networks: Nodal, Zonal and Discriminatory Pricing

Pär Holmberg () and 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 who are allowed to participate in the real-time market the three market designs result in the same efficient dispatch. However, zonal pricing with counter-trading results in additional payments to producers in export-constrained nodes.

Keywords: Congestion management; Wholesale electricity market; Transmission network; Nodal pricing; Zonal pricing with countertrading; Discriminatory pricing; Large game; (follow links to similar papers)

JEL-Codes: C72; D44; D61; L13; L94; (follow links to similar papers)

32 pages, April 20, 2012

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This paper is published as:
Holmberg, Pär and Ewa Lazarczyk, (2015), 'Comparison of congestion management techniques: Nodal, zonal and discriminatory pricing.', Energy Journal, Vol. 36, No. 2, pages 145-166

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