Inversion of real time spot prices in the direction of real power flow in a transmission line

Summary form only given, as follows. An increasing number of electricity markets employing some form of spot pricing. However, limited experience of the behaviour of spot prices exists. This paper introduces and investigates one particular aspect of pricing behaviour observed in the New Zealand spot market, known as "price inversion". Spot prices are generally calculated using some form of OPF or power-flow software. The phenomena of price inversion is investigated using the DC power-flow implemented in the New Zealand spot market, and using a full AC power-flow. Price inversion is shown to be dependent on the physical characteristics of the power system. The economic implications of price inversion are also discussed.