Congestion Pricing (Grid)
Varying electricity transmission charges based on grid congestion, where high-demand pathways cost more. Locational marginal pricing (LMP) reflects congestion in wholesale markets.
Why It Matters
Grid congestion affects local electricity prices and can create price spikes. Distributed solar and storage reduce local congestion, potentially earning higher value.
Related Terms
Congestion
When too much electricity needs to flow through a transmission line or path that doesn't have enough capacity, leading to rerouting, curtailment, or higher prices in the constrained area.
Wholesale Electricity Price
The price at which generators sell electricity to utilities and retailers in regional markets (PJM, ERCOT, CAISO, etc.), typically $20-80/MWh. Not directly paid by residential customers.
Transmission Charges
Fees for transporting electricity over high-voltage power lines from generation plants to local distribution substations. Usually a smaller portion of residential bills.