Zonal congestion management and settlement

A new method has been proposed to calculate and settle zonal congestion cost in deregulated power markets, which are a mix of the pool model and the bilateral model. Based on the different settlement methods deployed, deregulated power markets can be divided into pay-as-marginal-price market, pay-as-market-clearing-price market, and pay-as-bid market. All the three kinds of markets are considered in the proposed new method by solving the same optimization problem of zonal congestion management. For a pay-as-market-clear-price market, an average shadow price has been introduced to properly charge the zonal congestion impact, while maintaining revenue neutrality of the independent system operator (ISO). This new method deploys preferred balancing energy services by solving the optimization problem of zonal congestion management. The total system ancillary energy service cost is reduced to a minimum. The market indiscrimination and the revenue neutrality of the ISO are automatically maintained in this new method.