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Peak price hours in the Nordic power market winter 2009/2010: effects of pricing, demand elasticity and transmission capacities

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Abstract

The Nordic electricity market experienced extremely high prices during the winter 2009/2010. Using real data from the peak price hours the zonal solution from the Nordic market is replicated and compared to the nodal price solution when the central grid and its physical characteristics are explicitly modelled. Demand elasticity is introduced to the bid curves and its effect on prices and network utilisation is studied for the nodal solution. The sensitivity of the zonal solution to the changes in aggregate transfer capacities is investigated. The results demonstrate that better system utilisation is possible without capacity expansion. Nodal pricing solutions compared to the actual zonal pricing mechanism give insights into how the system functions in strained capacity situations and what hinders a more efficient system utilisation.

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  • Gribkovskaia, Victoria, 2015. "Peak price hours in the Nordic power market winter 2009/2010: effects of pricing, demand elasticity and transmission capacities," Discussion Papers 2015/9, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2015_009
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    File URL: http://hdl.handle.net/11250/276262
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    1. O'Neill, Richard & Mead, David & Malvadkar, Partha, 2005. "On Market Clearing Prices Higher than the Highest Bid and Other Almost Paranormal Phenomena," The Electricity Journal, Elsevier, vol. 18(2), pages 19-27, March.
    2. Lijesen, Mark G., 2007. "The real-time price elasticity of electricity," Energy Economics, Elsevier, vol. 29(2), pages 249-258, March.
    3. Chao, Hung-Po & Peck, Stephen, 1996. "A Market Mechanism for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 10(1), pages 25-59, July.
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    More about this item

    Keywords

    Nordic power market; effects of pricing; demand elasticity; transmission capacities; nodal pricing; zonal pricing;
    All these keywords.

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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