Working Paper Series,
Research Institute of Industrial Economics

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

JEL-codes: C72; D44; D61; L13; L94

Language: English

32 pages, April 20, 2012

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Published as

Pär Holmberg 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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