Zonal Marginal Pricing

A wholesale architecture in which electricity is priced within geographic bidding zones, inter-zonal congestion affects market prices and residual internal congestion is managed through redispatch.

Solution section

Energy Pricing & Dispatch

How electricity is traded, dispatched and priced.

Energy Pricing & Dispatch

Let $p_z(t)$ be the wholesale price in bidding zone $z$ .

Cross-zonal flows satisfy:

-F_{zz'}^{max} \leq F_{zz'}(t) \leq F_{zz'}^{max}.

When transfer capability is unconstrained, neighbouring zonal prices may converge.

When a cross-zonal constraint binds:

p_z(t) \neq p_{z'}(t).

The price therefore contains some locational scarcity information without assigning a separate settlement price to every transmission node.