An integrated approach to congestion management for European energy markets

Congestion management is an integral part of a properly designed electricity market. Transmission congestion becomes more and more an operational challenge for existing European energy markets. A market redesign is required in order to effectively cope with the increasing congestion due to high penetration of renewable energy resources that are far away from load centers. Locational marginal pricing (LMP) is proven to be a viable mechanism to achieve market-based congestion management. The basic model of Locational Marginal Pricing (LMP) is reviewed. Experiences of implementing similar LMP systems at different regional transmission organizations in the United States are shared. Options and various elements of redesign for EU power system based on the model of LMP are discussed.