Congestion

Congestion occurs when the desired power flow on a transmission line or corridor exceeds its physical, thermal, or stability-related capacity limit. It is one of the most consequential operational challenges in power systems, directly affecting electricity prices, generation costs, and investment decisions.

Key Aspects of Congestion:

• Physical vs. Stability Limits: Transmission capacity is constrained by thermal ratings (conductor heating), voltage limits, and dynamic stability margins. The binding constraint varies by situation, short lines are often thermally limited, while long lines are typically stability-limited.
• Price Separation: When a transmission path is congested, electricity prices diverge between the sending and receiving ends. In nodal pricing markets, this manifests as different locational marginal prices (LMPs) at each bus, with higher prices on the import-constrained side.
• Redispatch Costs: Relieving congestion requires backing down cheaper generators on the surplus side and ramping up more expensive generators on the deficit side, increasing total system generation costs. These congestion costs can amount to billions of euros annually in large interconnected systems.
• Congestion Revenue: In organized markets, the price difference across a congested interface generates congestion revenue (or congestion rent), which is typically allocated to holders of financial transmission rights (FTRs) or used to fund transmission investment.
• Transmission Planning Driver: Persistent congestion on specific corridors is a primary signal for transmission planners to evaluate network reinforcement, new lines, reconductoring, or dynamic line rating technologies, to increase capacity and reduce long-term congestion costs.