Congestion Management in the Nordic Power Market: Effects of Redispatch A Direct-Current Optimal Power Flow Model
Abstract
The nodal and zonal debate has been discussed many times. However, the zonal “market-clearing” solution would not clear the market without some form of redispatch taking place: not all line-capacity constraints are considered in the zonal model. This lack of consideration can cause these solutions to be infeasible. In this paper, we investigate the effects of redispatch on the zonal market-clearing solution and compare this solution to a nodal solution. In order to do so, we must estimate the “cost of redispatch” relative to the spot-market, which we do by comparing regulation volumes and prices to spot volumes and prices. By implementing these costs into a direct-current optimal power flow model that runs redispatch with deviation bids, we can approximate the costs of redispatching in a number of cases. We found that the redispatch formulation we used decreases the total welfare in all cases considered, but has a variety of effects on prices in these cases. The nodal and zonal debate has been discussed many times. However, the zonal “market-clearing” solution would not clear the market without some form of redispatch taking place: not all line-capacity constraints are considered in the zonal model. This lack of consideration can cause these solutions to be infeasible. In this paper, we investigate the effects of redispatch on the zonal market-clearing solution and compare this solution to a nodal solution. In order to do so, we must estimate the “cost of redispatch” relative to the spot-market, which we do by comparing regulation volumes and prices to spot volumes and prices. By implementing these costs into a direct-current optimal power flow model that runs redispatch with deviation bids, we can approximate the costs of redispatching in a number of cases. We found that the redispatch formulation we used decreases the total welfare in all cases considered, but has a variety of effects on prices in these cases.