For solving congestion within countries - 'national congestion' - in many countries system redispatch is applied (sometimes called: 'counter trading'). This paper proposes two new redispatch approaches, 'market redispatch' and 'hybrid redispatch', which may be used for solving electricity network congestion within a single price zone and which do not affect realized market transactions although it is nevertheless market based. The suggested redispatch models bridge the gap between ex ante market-based models and ex post system-based models. An economic assessment is provided for the alternative models to system redispatch. The main disadvantage of system redispatch is that it is vulnerable to market power abuse and escalating costs. Under market redispatch generators will not exaggerate constraint costs, since they are not compensated for constraint costs. However, the market redispatch model has the disadvantage that transaction cost are relatively high and the costs allocated to generators are likely to be more than required to achieve long-term efficiency in terms of plant siting. The hybrid redispatch model achieves a balance between various criteria. It avoids market power problems in the constrained off market, and provides balanced incentives for generators to locate outside of the constrained zone, which should improve long-term efficiency.
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