Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2004/8: Assessment of the Norwegian Transmission Pricing Rules by Using a Modified AC-OPF

Georgios C. Stamtsis (), Mette Bjørndal (), István Erlich () and Kurt Jörnsten ()
Additional contact information
Georgios C. Stamtsis: Department of Electrical and Electronics Engieering / EAN, University Duisburg-Essen, Postal: University Duisburg-Essen, Campus Duisburg, Department of Electrical and Electronics Engieering / EAN , Bismarckstr. 81, 47057 Duisburg, Germany
Mette Bjørndal: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway
István Erlich: Department of Electrical and Electronics Engieering / EAN, University Duisburg-Essen, Postal: University Duisburg-Essen, Campus Duisburg, Department of Electrical and Electronics Engieering / EAN , Bismarckstr. 81, 47057 Duisburg, Germany
Kurt Jörnsten: Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Finance and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: This paper focuses on the combined effects of loss factors and zonal pricing in a system that takes as a starting point the procedures of transmission pricing in the Norwegian power system. It interprets the notion of loss factors in an AC power flow model, and develops a method for finding zonal prices consistent with a restricted AC optimal power flow. The effects of decomposing the nodal prices to find a loss factor to cover the marginal cost of losses, and letting the congestion management be resolved by zonal prices based on a DC approximation of the flows, are evaluated by comparing the resulting net prices to those of an optimal AC power flow (ACOPF).

Keywords: Congestion management; deregulated electricity markets; optimal power flow; loss factors; nodal pricing; Nord Pool; Norwegian power market; pool model; transmission pricing; zonal pricing

JEL-codes: L94

8 pages, June 1, 2004

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