ERCOT electricity market: Transition from zonal to nodal market operation

Competitive electricity market has been of interest for more than a decade, with every electricity market presenting its own unique characteristics and features. The Electric Reliability Council of Texas (ERCOT) is one of the eight independent system operators (ISO) in North America which is currently structured as a zonal model. ERCOT is planning to introduce some changes in market design and transitioning into the nodal market operation. Originally scheduled for October 2006, implementation has been deferred to December 2010. This paper discusses some operational challenges in ERCOT, the ongoing discussions of market redesign, and the current status of the evolution of the ERCOT market.