Effectiveness of Zonal Pricing Congestion Management Scheme in the European Electricity Market

One of the challenges connected with liberalization of the electricity market is the management of congestion in an interconnected network. Currently congestion management schemes employed in Europe vary from border to border. Due to the complexity of the network all of the schemes use a zonal approach where the whole market is split into hypothetical zones corresponding to countries. This paper has analyzed the effectiveness of the zonal congestion management scheme by using a model of the 1st Synchronous electricity grid region. A number of methods have been proposed for aggregating the nodes into zones on the basis of their nodal prices. These different mechanisms have been discussed from an algorithmic point of view and their actual results (zones) are presented and analyzed. Finally the effects of the zonal pricing scheme on the actual market were also discussed. The results of the research should be interesting in the African context if, as envisaged, regional interconnected networks are formed in Africa.