In a zonal market, the price a customer pays is determined by the clearing price of the last megawatt generated to meet load at a zonal level. This forces everyone in that zone to pay the same price, even if they did not contribute any congestion impacting price.
In a nodal market, all load is priced by load zone – the weighted average of all nodes within that zone. Since generation is priced separately at the node, it should be easier to determine which LSEs are responsible for the congestion and charge them accordingly.
Congestion refers to delivery constraints (either transmission or distribution) due to high volume energy usage. In the new nodal market, congestions costs are shared only by contributing parties. Congestion is also now managed by resource, not portfolio. These two changes should, in theory, incentivize generation and transmission providers to relocate resources in high-use areas.
ERCOT uses the RUC (Reliability Unit Commitment) process to ensure that there is adequate resource and ancillary service capacity committed in the proper locations to serve forecasted load. RUC will be one of many tools ERCOT uses to ensure the grid operates correctly and efficiently in the nodal market.
Hub to Zone
The difference, in price, between the trading hub and the load zone.
The nodal market assesses imbalance charges on QSEs with excessive load or insufficient resources. First Choice Power is passing all nodal costs, including imbalance, through to our customers.
A voluntary daily co-optimized market, run the day before electricity flows, for ancillary service capacity, CRRs, and forward financial energy transactions. This new market system is designed to result in the lowest system costs and reduced volatility.
Real-time markets are price signals determined at the time of electricity flowing on the grid.
A technically and financially qualified market participant allowed direct communication with ERCOT data and settlement functions, including payments and charges.
The simple average of the Hub Bus prices for each hour of the settlement interval of the DAM. In real time, the simple average of the time-weighted hub bus prices for each five-minute settlement interval.
The load-weighted average Locational Marginal Price at all electrical buses assigned to that Load Zone.
Location Marginal Price
The price signal at a specific delivery point, including both energy and congestion costs. Locational Marginal Pricing was designed to capture the true cost of serving the next increment of load at a bus (node).