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Redispatch in Zonal Pricing Electricity Markets

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  • Blázquez de Paz, Mario

    (the Norwegian University of Science and Technology, Trondheim)

Abstract

Zonal pricing electricity markets operate sequentially. First, the suppliers compete in a spot market. Second, to alleviate the congestion in the transmission line, in a redispatch market, the suppliers in the importing node are called into operation to increase their production, and the suppliers in the exporting node are compensated to reduce their production. I characterize the equilibrium in a zonal market when the competition is imperfect and the spot and redispatch markets operate sequentially. I also work out the equilibrium when the transmission line is taken into account in the spot market, i.e., it is not necessary to introduce a redispatch market to alleviate the congestion in the transmission line. I find that the consumers' welfare and suppliers' profits depend crucially on the type of redispatch design implemented by the auctioneer, and that could introduce long term investment distortions.

Suggested Citation

  • Blázquez de Paz, Mario, 2019. "Redispatch in Zonal Pricing Electricity Markets," Working Paper Series 1278, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1278
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    References listed on IDEAS

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    More about this item

    Keywords

    Electricity auctions; Redispatch design; Transmission constraint; Zonal pricing electricity markets;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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