Bottleneck Revenue

Definition

Congestion revenue arises when transmission capacity between two bidding areas is fully utilised and there is a price difference between them. Nord Pool auctions the right to transport power across the bottleneck - the difference between the buying and selling price constitutes the congestion revenue. In Norway, these revenues accrue to Statnett, which is obliged to use them to increase capacity and reduce the bottleneck over time. In periods with a large price difference between southern Norway (high price, cable exports) and northern Norway (low price, abundant water), congestion revenues are significant. Politically, congestion revenues are a sensitive topic: they make it visible that Norwegian consumers pay a higher price because export capacity is limited - and that interconnectors contribute to price increases.

In practice

In practice, congestion revenues are visible in the power price whenever NO2 (southern Norway, cable exports) is priced 20–50 øre/kWh higher than NO4 (northern Norway, surplus of water). The difference between the buying and selling price across the bottleneck accrues to Statnett and is to be reinvested in grid capacity. For Norwegian households and power suppliers, congestion revenues are a politically charged term: they clearly demonstrate that interconnectors and capacity constraints drive up prices in the south of the country. For IT systems, congestion revenues are primarily accounting data reported by Statnett - they do not directly affect operational systems.

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Definition

In practice

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