Version 1
: Received: 29 October 2024 / Approved: 29 October 2024 / Online: 30 October 2024 (02:19:24 CET)
How to cite:
Kwag, K.; Shin, H.; Oh, H.; Yun, H.; Yoon, H.; Kim, W. Quantifying the Impact and Policy Implications of Transitioning to Zonal and Nodal Pricing in the Electricity Market: A South Korean Case Study. Preprints2024, 2024102337. https://doi.org/10.20944/preprints202410.2337.v1
Kwag, K.; Shin, H.; Oh, H.; Yun, H.; Yoon, H.; Kim, W. Quantifying the Impact and Policy Implications of Transitioning to Zonal and Nodal Pricing in the Electricity Market: A South Korean Case Study. Preprints 2024, 2024102337. https://doi.org/10.20944/preprints202410.2337.v1
Kwag, K.; Shin, H.; Oh, H.; Yun, H.; Yoon, H.; Kim, W. Quantifying the Impact and Policy Implications of Transitioning to Zonal and Nodal Pricing in the Electricity Market: A South Korean Case Study. Preprints2024, 2024102337. https://doi.org/10.20944/preprints202410.2337.v1
APA Style
Kwag, K., Shin, H., Oh, H., Yun, H., Yoon, H., & Kim, W. (2024). Quantifying the Impact and Policy Implications of Transitioning to Zonal and Nodal Pricing in the Electricity Market: A South Korean Case Study. Preprints. https://doi.org/10.20944/preprints202410.2337.v1
Chicago/Turabian Style
Kwag, K., Hyojeong Yoon and Wook Kim. 2024 "Quantifying the Impact and Policy Implications of Transitioning to Zonal and Nodal Pricing in the Electricity Market: A South Korean Case Study" Preprints. https://doi.org/10.20944/preprints202410.2337.v1
Abstract
Electricity markets are transitioning to zonal and nodal pricing to maximize social welfare, improve price signals, and enhance congestion management. South Korea, traditionally reliant on uniform pricing, is evaluating this transition but lacks a detailed impact analysis. This study assessed the impacts of various zonal and nodal pricing schemes on power systems and provided policy implications for this transition. We (1) modeled the power system at various levels of granularity, obtaining a detailed 4,579-node representation; (2) constructed a set of zonal and nodal pricing schemes reflecting changes in market-clearing models and pricing mechanisms; and (3) performed quantitative analyses through simulations for each scheme. Under the current system marginal price (SMP)-based uniform pricing, the schemes with least market impact are SMP-based zonal pricing with two bidding zones and extended locational marginal pricing. These results can guide the development of an appropriate pricing transition pathway, although a market price reduction of 4.8–7.0% appears inevitable. Within the Korean electricity market, wherein Transco is a monopoly retailer, we identified potential conflicts of interest for Transco in zonal and nodal pricing. By focusing on South Korea, this study offers valuable insights into any electricity market considering the transition to zonal and nodal pricing.
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
