Introduction of nodal pricing into the new mexican electricity market through FTR allocations
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In: The Energy Journal, Vol. 38, No. SI 1, 01.09.2017, p. 157-172.
Research output: Journal contributions › Journal articles › Research › peer-review
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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 -