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