Regional Pricing and Its Problems (original) (raw)

2014

Abstract

The majority of this text has focused on efficient or optimal dispatch which involves setting a different locational marginal price for electricity at each node. However, some markets, including the Australian market, do not differentiate electricity prices in this way and instead set a single price for each region. Chapter 19 introduces regional pricing, discusses the problems that arise as a result and discusses how these problems might be resolved. The chapter begins with a definition of regional and/or zonal pricing and discusses the range of approaches to regional pricing. The chapter continues with a discussion of the problems that arise from regional pricing including the behaviour known as disorderly bidding. The discussion covers the impact on the efficiency of dispatch, the impact on the settlement residues and the impact on the balance sheet of the system operator. The chapter goes on to discuss how constrained-on/constrained-off payments might solve this problem, but may...

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