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Market-Based Redispatch May Result in Inefficient Dispatch

Submission Status:revision under review
  • In this paper we analyze a uniform price electricity spot market that is followed by redispatch in the case of network congestion. We assume that the transmission system operator is incentivized to minimize redispatch cost and compare a cost-based redispatch (CBR) to a market-based redispatch (MBR) mechanism. For networks with at least three nodes we show that in contrast to CBR, in the case of MBR the redispatch cost minimizing allocation may not be short-run efficient. As we demonstrate, in case of MBR the possibility of the transmission system operator to reduce redispatch cost at the expense of a reduced welfare may be driven by the electricity supply side or the electricity demand side. If, however, the transmission system operator is obliged to implement the welfare maximizing (instead of the redispatch cost minimizing) dispatch by regulation, this will result in an efficient dispatch also in case of MBR.

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Metadaten
Author:Veronika Grimm, Alexander Martin, Christian Sölch, Martin Weibelzahl, Gregor Zöttl
Document Type:Preprint
Language:English
Date of Publication (online):2019/12/17
Date of first Publication:2019/12/17
Release Date:2019/12/17
Tag:Electricity Markets, Redispatch, Congestion Management, Computational Equilibrium Models
Institutes:Friedrich-Alexander-Universität Erlangen-Nürnberg
Subprojects:B07
B08
B09
Licence (German):License LogoCreative Commons - CC BY - Namensnennung 4.0 International