Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/210919 
Year of Publication: 
2019
Series/Report no.: 
IFN Working Paper No. 1278
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
Zonal pricing electricity markets operate sequentially. First, the suppliers compete in a spot market. Second, to alleviate the congestion in the transmission line, in a redispatch market, the suppliers in the importing node are called into operation to increase their production, and the suppliers in the exporting node are compensated to reduce their production. I characterize the equilibrium in a zonal market when the competition is imperfect and the spot and redispatch markets operate sequentially. I also work out the equilibrium when the transmission line is taken into account in the spot market, i.e., it is not necessary to introduce a redispatch market to alleviate the congestion in the transmission line. I find that the consumers' welfare and suppliers' profits depend crucially on the type of redispatch design implemented by the auctioneer, and that could introduce long term investment distortions.
Subjects: 
Electricity auctions
Redispatch design
Transmission constraint
Zonal pricing electricity markets
JEL: 
D43
D44
L13
L94
Document Type: 
Working Paper

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