Dear EMI staff,
I am currently completing a thesis for my master degree. The topic is about the merit order effect of wind. When I look at the data of zonal price, I am curious about how is the zonal region delimitated ? delimitated by congestion or the geographic border? Also, why use two pricing mechanism at the same time? Could anyone give any suggestion? Thank you!
Best regards
Ben
Yes, transmission losses impact final prices.
If you look at the total injection into the system for any period of time, you will find that it is greater than the total offtake from the system for that same period. The difference is transmission losses. Similarly, the value of the volume taken off the grid (nodal price times the volume at a node summed over all nodes) will be greater than the value of injections. In other words, losses first have to be generated before they can be lost and they have to be paid for.
Many other factors, besides transmission losses, also impact prices - for example, offer (supply) prices, transmission constraints, and the supply-demand balance, i.e. scarcity.
Perhaps take a look at this post and the links therein for a little more information about the model that determines prices in the wholesale market.
Cheers
Phil
Hi Phil,
In terms of transmission loss, is the transmission loss affect the final price? if the demand side pay the electricity price, do they need to pay price of lost amount of electricity? Or the demand side only pay the electricity they receive?
Best regards
Ben
Hi Ben
New Zealand operates a nodal pricing system, sometimes called a locational marginal pricing (LMP) system. Final prices are currently determined ex post. The 'zonal' prices you see on EMI are just the nodal prices within each zone averaged. You can see how we've mapped points of connection (POCs) to zones from the network supply points report.
Cheers
Phil
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