VL 06: Electricity Sector Modeling

Question 1

What is uniform pricing?

Answer 1

Single price for all nodes

• Market dispatch for entire network
• Only supply and demand goes into the optimization
• No transmission network included (“copper plate”)
• Congested lines no constraint for the market
• Congestions are dealt in an ex-post analysis -> redispatch

Question 2

What is zonal pricing?

Answer 2

Multiple zones

• Separation of markets in several zones between nodes
• Only exchange constraints between zones
• Zones according to congested lines (if possible)
• Feasible solution if all congestions in between zones, redispatch otherwise
• Example: Nordpool market, Essentially EU

Question 3

What is nodal pricing?

Answer 3

Nodal markets

• Every node is its own market
• Full transmission network is part of the market clearing
• Congestions are part of the overall electricity price
• Better market dispatch as higher utilization of available transmission capacity
• Example: PJM market

Question 4

Formulate the Dispatch Problem

Answer 4

s. 15

Question 5

Formulate the Zonal Dispatch Problem

Answer 5

s. 23

Question 6

The electricity market is cleared hourly using the concept of a “Merit Order”.

Describe what the merit order is and what is the resulting market price.

Answer 6

The merit order clears the electricity market based on the bids from the generators. Each bid is sorted from lowest to highest and all bids are accepted until the demand is cleared. The last accepted bid defines the market price.

(bid = angebot)

Question 7

Why does the merit order market clearing concept provides an incentive to bid to marginal generating costs?

Answer 7

Since the last bid defines to price, there is no incentive for strategic bidding. Only the last accepted bid could gain revenue by increasing the bid, with the risk that another bid gets accepted first.

Question 8

How are renewables usually represented in the merit order?

Answer 8

Renewables are usually a must-take and therefore considered in the merit order at cost 0.

Question 9

Describe why the merit order market clearing mechanism can be well represented using methods of operations research?

Answer 9

It resembles a cost minimization problem.

Question 10

What is the first Kirchoff Law?

Answer 10

“Knotenregel”, Strom

Question 11

What is the second Kirchoff Law?

Answer 11

“Maschenregel”, Spannung