Zonal and Nodal Models of Energy Market in European Union

Abstract

Along with economic development and development of power systems, new, more effective models of the energy market are sought. Traditional zonal models used on the electricity market have proved to be poorly adapted to new circumstances and phenomena occurring in the macroeconomic environment. The main aim of the research was to show the direction (including the nodal model and prosumer behavior) in which the energy market should develop in order to meet the state-of-the-art technical, ecological and social challenges. Therefore, with the new challenges, a new chapter has opened up on very interesting research for the electrical industry. There are new solutions for the development and modernization of models from the point of view of management and econometrics of the energy market, adapted to new challenges related to ecology, technology, and competition. This article presents the zone model with its imperfections and suggestions for its improvement and proposes a nodal model that may in the near future become a new model for the functioning of the electricity market in Europe.

Determination of Price Zones during Transition from Uniform to Zonal Electricity Market: A Case Study for Turkey

“…The silhouette score and silhouette coefficient lie in the interval [−1, 1]. For Equation (9) to be close to 1, µ min out (x i ) should be greater than µ in (x i ), as µ in (x i ) is a measure of how dissimilar x i is to its own cluster and µ in (x i ) is a measure of how dissimilar x i to other clusters. For Equation (9) to be close to −1, however, we require µ in (x i ) to be greater than µ min out (x i ), which implies a high dissimilarity within the cluster.…”

“…For Equation (9) to be close to 1, µ min out (x i ) should be greater than µ in (x i ), as µ in (x i ) is a measure of how dissimilar x i is to its own cluster and µ in (x i ) is a measure of how dissimilar x i to other clusters. For Equation (9) to be close to −1, however, we require µ in (x i ) to be greater than µ min out (x i ), which implies a high dissimilarity within the cluster. Therefore, if the coefficient is close to 1, we can conclude that the resultant clusters are dense and well separated.…”

“…Europe and America constructed electricity markets differently. They were shaped by the discussions that started in the 1990s [5][6][7][8], and discussions are still ongoing for these two continents [9][10][11]. Europe follows the ZMP system, but America follows the LMP system for different reasons.…”

“…In addition, the balancing markets being as close as possible to real-time operations requires a change in view regarding the reference market. A very detailed comparison of zonal and nodal markets is also studied in Reference [9], stating that the zonal pricing model contains simplifications and requires additional mechanisms to compensate the investments. However, the framework of transitioning from vertically integrated utilities to the market structure follows a roadmap in several countries: UMP first, then ZMP, and then LMP [13][14][15].…”

New Technologies and Innovative Solutions in the Development Strategies of Energy Enterprises

“…There is also a group of small companies which observe the market once a week. However, large companies regularly carry out market observations once a month [85]. Another issue related to conducting market research and observing it is the issue of financial expenditure allocated for this purpose.…”