Zonal marginal pricing approach based on sequential network partition and congestion contribution identification

•Proposing a zonal marginal pricing approach based on network partition and congestion identifying.•Network is partitioned in sequence to eliminate congestions with an optimization model.•Congestion contributions are identified and used to decide ascription relations of nodes to zones.

Pricing mechanism is a critical component in the infrastructure of electricity market. Zonal marginal pricing (ZMP) mechanism has been implemented for its simplicity and adaptability of managing practical electricity markets. In order to overcome drawbacks of current ZMP mechanisms, a novel ZMP approach based on sequential network partition and congestion contribution identification is proposed in this paper. Network is partitioned sequentially in the presence of congestion to eliminate intra-zonal congestions. In the approach, an optimization model is incorporated to minimize generation procurement costs with a given number of zones. Congestion contributions of nodes to the congested lines are identified using power transfer distribution factors (PTDF), and ascription relations between nodes and zones are thus decided. A numerical case based on IEEE-39 system is carried out to demonstrate the effectiveness of the proposed approach.