IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v38y2017i1_supplp157-172.html

Introduction of Nodal Pricing into the new Mexican Electricity Market through FTR Allocations

Author

Listed:
  • Friedrich Kunz
  • Juan Rosellón
  • Claudia Kemfert

Abstract

ABSTRACT The change from a subsidized zonal pricing system to a full nodal pricing regime in the new Mexican electricity market could improve the efficiency of electricity system operation. However, resulting price modifications might also swing surplus across producers and consumers. In this paper, we calculate nodal prices for the Mexican power system and further analyze how allocations of financial transmission rights (FTRs) can be used to mitigate resulting distributional effects. The share of FTRs to be allocated to different generation plants and loads is studied as a second step of an electricity tariff subsidy reform agenda that includes, as a first step, the change to nodal pricing and, as a third step, the reformulation of actual regressive subsidies in a progressive way. We test our model in a realistic nodal price setting, based on an hourly modeling of the Mexican power system.

Suggested Citation

  • Friedrich Kunz & Juan Rosellón & Claudia Kemfert, 2017. "Introduction of Nodal Pricing into the new Mexican Electricity Market through FTR Allocations," The Energy Journal, , vol. 38(1_suppl), pages 157-172, June.
    • Handle: RePEc:sae:enejou:v:38:y:2017:i:1_suppl:p:157-172
    DOI: 10.5547/01956574.38.SI1.fkun
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/01956574.38.SI1.fkun
    Download Restriction: no
    File URL: https://libkey.io/10.5547/01956574.38.SI1.fkun?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kunz, Friedrich & Neuhoff, Karsten & Rosellón, Juan, 2016. "FTR allocations to ease transition to nodal pricing: An application to the German power system," Energy Economics, Elsevier, vol. 60(C), pages 176-185.
    2. repec:aen:journl:ej36-4-egerer is not listed on IDEAS
    3. Jonas Egerer & Juan Rosellon & Wolf-Peter Schill, 2015. "Power System Transformation toward Renewables: An Evaluation of Regulatory Approaches for Network Expansion," The Energy Journal, , vol. 36(4), pages 105-128, October.
    4. Wolf-Peter Schill & Jonas Egerer & Juan Rosellón, 2015. "Testing regulatory regimes for power transmission expansion with fluctuating demand and wind generation," Journal of Regulatory Economics, Springer, vol. 47(1), pages 1-28, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claudia Kemfert & Friedrich Kunz & Juan Rosellón, 2015. "A Welfare Analysis of the Electricity Transmission Regulatory Regime in Germany," Discussion Papers of DIW Berlin 1492, DIW Berlin, German Institute for Economic Research.
    2. repec:aen:journl:ej38-si1-rosellon is not listed on IDEAS
    3. Fernando Fuentes & Pablo Serra, 2022. "Chilean Electric Transmission Regulation: From a Merchant Approach to Central Planning," Energies, MDPI, vol. 15(12), pages 1-15, June.
    4. Kemfert, Claudia & Kunz, Friedrich & Rosellón, Juan, 2016. "A welfare analysis of electricity transmission planning in Germany," Energy Policy, Elsevier, vol. 94(C), pages 446-452.
    5. Davi-Arderius, Daniel & Jamasb, Tooraj & Rosellon, Juan, 2025. "Network Operation Constraints on the Path to Net Zero," Applied Energy, Elsevier, vol. 382(C).
    6. Zenón, Eric & Rosellón, Juan, 2017. "Optimal transmission planning under the Mexican new electricity market," Energy Policy, Elsevier, vol. 104(C), pages 349-360.
    7. Davi-Arderius, Daniel & Jamasb, Tooraj & Rosellon, Juan, 2024. "Network Operation and Constraints and the Path to Net Zero," Working Papers 8-2024, Copenhagen Business School, Department of Economics.
    8. Hesamzadeh, M.R. & Rosellón, J. & Gabriel, S.A. & Vogelsang, I., 2018. "A simple regulatory incentive mechanism applied to electricity transmission pricing and investment," Energy Economics, Elsevier, vol. 75(C), pages 423-439.
    9. Li, Yuan & Zhou, You & Yi, Bo-Wen & Wang, Ya, 2021. "Impacts of the coal resource tax on the electric power industry in China: A multi-regional comprehensive analysis," Resources Policy, Elsevier, vol. 70(C).
    10. Ali Darudi & Hannes Weigt, 2024. "Review and Assessment of Decarbonized Future Electricity Markets," Energies, MDPI, vol. 17(18), pages 1-38, September.
    11. repec:aen:journl:ej36-4-egerer is not listed on IDEAS
    12. Bushnell, James & Ibarra-Yúnez, Alejandro & Pappas, Nicholas, 2019. "Electricity transmission cost allocation and network efficiency: Implications for Mexico's liberalized power market," Utilities Policy, Elsevier, vol. 59(C), pages 1-1.
    13. Kunz, Friedrich, 2018. "Quo Vadis? (Un)scheduled electricity flows under market splitting and network extension in central Europe," Energy Policy, Elsevier, vol. 116(C), pages 198-209.
    14. Jonas Egerer, 2016. "Open Source Electricity Model for Germany (ELMOD-DE)," Data Documentation 83, DIW Berlin, German Institute for Economic Research.
    15. Eicke, Anselm & Schittekatte, Tim, 2022. "Fighting the wrong battle? A critical assessment of arguments against nodal electricity prices in the European debate," Energy Policy, Elsevier, vol. 170(C).
    16. Wolf-Peter Schill & Jonas Egerer & Juan Rosellón, 2015. "Testing regulatory regimes for power transmission expansion with fluctuating demand and wind generation," Journal of Regulatory Economics, Springer, vol. 47(1), pages 1-28, February.
    17. Hesamzadeh, Mohammad Reza & Biggar, Darryl R., 2021. "Generalized FTRs for hedging inter-nodal pricing risk," Energy Economics, Elsevier, vol. 94(C).
    18. Luca Lena Jansen & Georg Thomaßen & Georgios Antonopoulos & Ľuboš Buzna, 2022. "An Efficient Framework to Estimate the State of Charge Profiles of Hydro Units for Large-Scale Zonal and Nodal Pricing Models," Energies, MDPI, vol. 15(12), pages 1-23, June.
    19. Mohammad Reza Hesamzadeh & Juan Rosellón & Steven A. Gabriel, 2015. "A Profit-Maximizing Approach for Transmission Expansion Planning Using a Revenue-Cap Incentive Mechanism," Discussion Papers of DIW Berlin 1470, DIW Berlin, German Institute for Economic Research.
    20. Bo-Wen Yi & Wolfgang Eichhammer & Benjamin Pfluger & Ying Fan & Jin-Hua Xu, 2019. "The Spatial Deployment of Renewable Energy Based on China’s Coal-heavy Generation Mix and Inter-regional Transmission Grid," The Energy Journal, , vol. 40(4), pages 45-74, July.
    21. repec:aen:journl:ej37-si3-egerer is not listed on IDEAS
    22. Espinosa, Rubi & Rosellon, Juan, 2017. "Optimal Transmission Tariff Regulation for the Southern Baja-Californian Electricity Network System," MPRA Paper 98092, University Library of Munich, Germany.
    23. Huppmann, Daniel & Egerer, Jonas, 2015. "National-strategic investment in European power transmission capacity," European Journal of Operational Research, Elsevier, vol. 247(1), pages 191-203.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:38:y:2017:i:1_suppl:p:157-172. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.