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Technical Aspects of Nodal Pricing

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  • Neuhoff, Karsten
  • Boyd, Rodney

Abstract

The expansion of renewable generation and closer integration of European power markets requires new tools and procedures for system operation. The US experience with nodal pricing offers options to tackle the emerging challenges, and thus may facilitate further integration of intermittent renewable generation technologies. At a one day roundtable hosted by CPI Berlin, experts from European transmission system operators (TSOs) and international specialists explored the technical aspects of implementing and operating a power market design based on nodal pricing, and discussed experiences that might address challenges emerging in Europe: 1. Can the interest of market participants in trading energy on short notice be balanced with TSOs’ need for sufficient time to assess and adjust the dispatch to ensure system security? 2. For generation and load, the provision of reserve and response capabilities is linked to energy production and use, but energy is traded on separate platforms and at different times. Is integration necessary and possible? 3. The EU Target Model aims to facilitate joint trading of energy with transmission use – what lessons can be drawn from the US experience? 4. What are the merits of European transmission owners only trading energy to ensure system security versus US Independent System operators facilitating short-term market clearing? 5. How can the operation of the power system and energy markets provide information to support investment choices in grid and generation?

Suggested Citation

  • Neuhoff, Karsten & Boyd, Rodney, 2011. "Technical Aspects of Nodal Pricing," EconStor Research Reports 65877, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esrepo:65877
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    File URL: https://www.econstor.eu/bitstream/10419/65877/1/Technical-Aspects-of-Nodal-Pricing-Workshop-Report.pdf
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    Cited by:

    1. Sarfati, M. & Hesamzadeh, M-R. & Holmberg, P., 2019. "Production efficiency of nodal and zonal pricing in imperfectly competitive electricity markets," Cambridge Working Papers in Economics 1919, Faculty of Economics, University of Cambridge.

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