TY - JOUR

T1 - Introduction of nodal pricing into the new mexican electricity market through FTR allocations

AU - Kunz, Friedrich

AU - Rosellón, Juan

AU - Kemfert, Claudia

PY - 2017/9/1

Y1 - 2017/9/1

N2 - The change from a subsidized zonal pricing system to a full nodal pricing regime in the new Mexican electricity market could improve the efficiency of electricity system operation. However, resulting price modifications might also swing surplus across producers and consumers. In this paper, we calculate nodal prices for the Mexican power system and further analyze how allocations of financial transmission rights (FTRs) can be used to mitigate resulting distributional effects. The share of FTRs to be allocated to different generation plants and loads is studied as a second step of an electricity tariff subsidy reform agenda that includes, as a first step, the change to nodal pricing and, as a third step, the reformulation of actual regressive subsidies in a progressive way. We test our model in a realistic nodal price setting, based on an hourly modeling of the Mexican power system.

AB - The change from a subsidized zonal pricing system to a full nodal pricing regime in the new Mexican electricity market could improve the efficiency of electricity system operation. However, resulting price modifications might also swing surplus across producers and consumers. In this paper, we calculate nodal prices for the Mexican power system and further analyze how allocations of financial transmission rights (FTRs) can be used to mitigate resulting distributional effects. The share of FTRs to be allocated to different generation plants and loads is studied as a second step of an electricity tariff subsidy reform agenda that includes, as a first step, the change to nodal pricing and, as a third step, the reformulation of actual regressive subsidies in a progressive way. We test our model in a realistic nodal price setting, based on an hourly modeling of the Mexican power system.

KW - Congestion management

KW - Electricity

KW - Financial transmission rights

KW - Mexico

KW - Nodal prices

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=85021326098&partnerID=8YFLogxK

U2 - 10.5547/01956574.38.SI1.fkun

DO - 10.5547/01956574.38.SI1.fkun

M3 - Journal articles

AN - SCOPUS:85021326098

VL - 38

SP - 157

EP - 172

JO - The Energy Journal

JF - The Energy Journal

SN - 0195-6574

IS - SI 1

ER -