Chapter 14

The Evolution of Smart Grids Begs Disaggregated Nodal Pricing

Günter Knieps    University of Freiburg, Freiburg, Germany


Changes in the architecture of smart electricity systems encompass the growing importance of the interaction of distribution networks with microgrids. Make or buy decisions to build and operate a smart grid platform, as well as decisions to extract and inject electricity from an electricity network, should take into account the node-specific opportunity costs imposed on electricity networks by injection or extraction. The implementation of disaggregated nodal pricing leads to an optimal allocation of scarce transmission capacities. This holds not only within networks, but also regarding the incentive compatible ...

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